Vodafone UK and Virgin Media O2 have agreed to extend and enhance their existing mobile network sharing agreement for more than a decade.
The deal with ensure quality mobile coverage across the country and provide improved services for customers.
Many elements of the agreement expand on the existing arrangement between the two companies and are independent of the Vodafone UK and Three UK merger outcome. However, subject to completion of the merger, the operators have agreed that Virgin Media O2 will acquire spectrum from the newly-created MergeCo, establishing three scaled MNOs, each with better alignment of spectrum holding.
Through a combination of MergeCo's commitment to invest £11 billion in its network over the next decade (subject to CMA approval) and Virgin Media O2's £2 billion annual investment in its networks and services, the agreement will ensure choice and competition is improved. This will not only benefit their customers but also businesses, which includes MVNOs who make use of networks via wholesale partnerships to deliver their own mobile services. The Agreement will ensure these virtual operators have access to a choice of three high-quality, scaled wholesale competitors, further supporting the UK's MVNO segment.
Ahmed Essam, CEO, European Markets, Vodafone, said, "With this agreement and our merger with Three, we will transform the mobile experience for over 50 million customers in the UK for the long-term, providing significant network improvements including more choice, better quality and greater coverage across the country. These benefits extend to both retail and wholesale MVNO customers. 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."
Lutz Schüler, CEO of Virgin Media O2, said, "This new agreement with Vodafone ensures that quality mobile network choice, performance, coverage and competition is enhanced to the benefit of millions of consumers, businesses and our mobile operator partners across the country. 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. We believe that this new agreement addresses the issues we have voiced and the CMA outlined in its initial decision, and will now continue our engagement with the regulator in this spirit."
The agreement includes plans for Virgin Media O2 to buy spectrum at market value from MergeCo, thus increasing its current holding. It also reduces the current imbalances in spectrum holding between the UK's MNOs, which will enhance competition in the mobile market, allowing MergeCo and Virgin Media O2 to provide increased capacity, speeds and greater coverage for their customers.