Vodafone and O2 explore sale of tower joint venture

Vodafone building (Vodafone)
A revised agreement between O2 and Vodafone could lead to the divestment of a joint venture that owns and manages the carriers' combined tower assets. (Vodafone)

O2 and Vodafone, the second- and third-largest mobile operators in the U.K., have inked a new agreement to expand their network sharing partnership to deploy 5G faster, but the announcement also calls for a likely divestment of a joint venture that owns and manages the carriers’ combined tower assets.

CTIL, the network sharing joint venture that owns the towers, could be sold or spun off to allow other operators to make use of the towers, setting up an environment similar to the U.S. where tower companies lease infrastructure and equipment to wireless carriers. While both companies made efforts to position the new agreement as a strengthened partnership, the details tell a different story.

Vodafone and O2 will “look to extend greater network autonomy in a number of larger cities by deploying their own separate radio equipment on approximately 2,500 sites, which represents about 15% of sites outside London,” according to the announcement. “Vodafone and O2 are also exploring options around their future transmission operating model which could drive synergies in the investment and operation of their end-to-end networks.”

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Once the new agreement is formally approved by regulators, which is expected sometime this year, the companies say they will “explore a possible monetization of CTIL” and “pursue opportunities to add further third party tenants to the towers.”

The results of the new agreement will be mixed with the carriers forming closer ties on transmission networks with higher capacity fiber for 5G, but a reduced level of sharing other equipment necessary for their respective mobile networks.

“We believe that these plans will generate significant benefits for our business and our customers as we move into the digital era of connected devices, appliances and systems on a mass scale,” Nick Jeffery, CEO of Vodafone UK, said in a prepared statement. “Customers will benefit from the best 5G experience available and we will deliver even faster speeds by using our spectrum holding more effectively.”