Vodafone UK and Virgin Media O2 enter new network-sharing deal

3 Jul 2024

Image: © Ralf/Stock.adobe.com

The deal also extends the agreement to the new entity that may be formed by Vodafone’s planned UK merger with Three, though that deal is under CMA investigation.

Vodafone UK and Virgin Media O2 have agreed to enhance their mobile network sharing agreement and extend the deal for more than a decade.

The two companies said the extension of this deal will ensure quality mobile coverage across the UK and bring improved services to customer. Most of the deal expands upon an existing agreement between the companies, but it also includes details for Vodafone UK’s planned merger with Three.

Vodafone and Three first announced their plans to merge their UK operations in June of last year. With more than 27m combined users, the new entity would surge to become the biggest mobile operator in the country – ahead of BT’s EE and Virgin Media’s O2.

With this new agreement, Virgin Media O2 will be able to acquire more network spectrum from the new entity – if the merger deal manages to go ahead. Virgin Media O2 CEO Lutz Schüler said the expanded agreement will enhance mobile network choice, performance, coverage and competition for UK customers.

“We are extending and bolstering elements of our existing network-sharing arrangement, while also ensuring there is a robust, balanced and functional structure in place for the long term should Vodafone and Three’s proposed merger gain consent,” Schüler said.

But the merger deal is not guaranteed to occur, as the UK’s Competition and Markets Authority (CMA) began an in-depth investigation into the deal earlier this year. The CMA has concerns that the deal could impact competition for certain goods and services. The investigation has a planned end date of 18 September 2024.

Vodafone and Three say this new entity would invest £11bn over 10 years to accelerate the roll-out of 5G across the UK, to the benefit of the country and its consumers. In this latest agreement, Vodafone and Virgin Media O2 argued that their investments and network sharing will enhance competition in the country.

“With this agreement and our merger with Three, we will transform the mobile experience for [more than] 50m customers in the UK for the long term, providing significant network improvements including more choice, better quality and greater coverage across the country,” said Vodafone European markets CEO Ahmed Essam.

“The proposed merger, together with this agreement, will boost competition by establishing a strong third player in the UK mobile market and will improve the balance of spectrum holdings, levelling the playing field between the UK’s mobile operators.”

UK telecoms regulator Ofcom was previously outspoken against major mergers in this sector, opposing Three UK’s attempted £10.5bn takeover of 02 in 2016. This takeover was ultimately blocked by the European Commission.

But in February 2022, the regulator made a statement that appeared to soften its stance on mergers, which promoted the possibility that competitors could combine their businesses in future – a possibility that may be squashed again depending on the CMA’s verdict.

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Leigh Mc Gowran is a journalist with Silicon Republic