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Mar. 24, 2009

Late yesterday, Vodafone and Telefonica announced they've agreed in sharing wireless phone networks in four countries, a move in which they expect to save hundreds of millions of dollars over the next 10 years.

The two phone carriers will share facilities in Germany, Spain, Ireland and Britain.

The two companies said that discussions about cooperation in the Czech Republic are also continuing as planned.

Matthew Key, CEO of Telefonica Europe, said in a statement "we are actively exploring additional areas for cooperation and by cutting our costs in areas of the phone business that customers don't see, we can ensure that we invest in areas they truly value."

Vodafone says the joint building of new antenna sites and the consolidation of existing 2G and 3G mast sites was expected to yield significant cost savings. The companies already have a sharing agreement in Spain.

However, the European Commission said the proposed deal could pose some competition concerns.

EU spokesman Martin Selmayr said that current rules allow national regulators to encourage the sharing of facilities as long as it complies with general competition rules.

Ovum noted that many regulators are encouraging network sharing because of its positive impact on the environment, but at the same time on the potential to roll out 3G in rural areas a lot faster.

Ovum also released a comment on the idea of network sharing.

The report noted that in developed countries, “3G coverage requirements are among the main drivers for the adoption of network sharing.”

The analysis also suggested that on the 2G front, where coverage rates are at 99 percent, cost savings are the main drivers for network sharing.

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Source: Vodafone and Telefonica.