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Vodafone and Virgin Media O2 reach network sharing deal in UK

New network sharing agreement (‘the Agreement’) significantly extends the current agreement between Vodafone UK Limited (‘Vodafone UK’) and VMED O2 UK Limited (‘Virgin Media O2’) for more than a decade;

Subject to the approval of the merger between Vodafone UK and Three UK (‘MergeCo’) by the UK’s Competition and Markets Authority, the Agreement provides a stable basis for MergeCo’s enlarged network to participate in the network sharing agreement and Virgin Media O2 will acquire spectrum from the MergeCo;

The Agreement and formation of MergeCo will transform the experience for tens of millions of customers across the UK and (subject to CMA approval) will rebalance the mobile market by creating a third scaled network operator;

The Agreement will extend benefits from MergeCo’s committed £11 billion network investment plan to customers of Virgin Media O2 and to the mobile virtual network operators (‘MVNO’) with whom they have wholesale partnerships; and

The Agreement and formation of MergeCo will significantly enhance competition in the retail and wholesale mobile markets.

Vodafone UK and Virgin Media O2 have agreed to extend and enhance their existing mobile network sharing agreement for more than a decade, bolstering quality mobile coverage across the country and delivering improved services for customers.

Many elements of the Agreement expand on the existing arrangement between Vodafone UK and Virgin Media O2 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 mobile network operators 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 quality mobile connectivity, choice and competition is enhanced. This will not only benefit the companies’ respective customers but also businesses, which includes MVNOs who make use of networks via wholesale partnerships to deliver their own mobile services to millions of people across the country. The Agreement will ensure these virtual operators have access to a choice of three high-quality, scaled wholesale competitors, further supporting an already thriving MVNO segment in the UK.

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 purchase spectrum at market value from MergeCo, increasing their current holding. The Agreement reduces the current imbalances in spectrum holding between the UK’s mobile network operators, 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.

CT Bureau

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