Vodafone and O2 – if you can’t beat them, join them

Vodafone and O2 have looked on enviously as Everything Everywhere and 3UK have boasted about the savings they’ve made on network costs and their claims of providing the most comprehensive coverage of any network in the UK through their shared MBNL venture.

The operators have spent months complaining to Ofcom about Everything Everywhere’s plans to launch LTE services ahead of the UK auction, and no doubt rued 3UK’s claims that it too could piggyback on EE’s network if it gets the green light.

Now they’ve decided if you can’t beat ‘em, join ‘em. Although they remain “ferocious competitors”, they have taken a leaf out of EE and 3UK’s book, and agreed to set up a single national grid providing 2G, 3G and eventually 4G services to 98 per cent of the UK population.

The deal is an extension of the existing Cornerstone agreement, formed in 2009, which saw the pooling of people, cell sites and network sharing technology between the two competing companies, and will eventually run to 18,500 sites.

However, unlike EE and 3UK, which have pooled together their resources and jointly manage the MBNL network, Vodafone and O2 looked at the UK, got out a really big marker pen and drew a line straight down the middle – a bit like what the Informer did as a child when sharing a bedroom with his brother – this is my side and this is your side, and if you step over to my side, I’m entitled to punch you. The Informer wonders if CEOs Guy Laurence and Ronan Dunne have drawn a similar clause into their own contract.

By signing this deal, the two operators now stand to save “at least 25 per cent of their network costs,” according to Emeka Obiodu, senior telecoms strategy analyst at Ovum. He said that considering Vodafone UK spent £575 million in capex in the year ended March 31 2012, Voda and O2 could make savings of over £100 million a year.

Source: www.telecoms.com