- Britain's Vodafone (VOD.L) and Virgin Media O2 have extended their network-sharing agreement to the mid-2030s, which includes a spectrum shift that could facilitate regulatory approval for Vodafone's merger with mobile operator Three. This $19 billion merger, currently under investigation by the Competition and Markets Authority (CMA), aims to consolidate Vodafone's UK operations with Hutchison's (0001.HK) Three UK. As part of the deal, an enlarged Vodafone-Three entity would sell a portion of its combined 59% share of the best spectrum for 5G networks to Virgin Media O2, which holds the lowest share. This move could potentially address the CMA's concerns about reducing the number of mobile networks in Britain from four to three.
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The network-sharing deal is expected to allow Virgin Media O2 customers to benefit from Vodafone's £11 billion ($14 billion) investment plan in 5G networks if the Three merger is approved. According to Ahmed Essam, Vodafone's CEO of European Markets, the merger and the new agreement would establish a strong third player in the UK mobile market, thus boosting competition. Vodafone and Telefonica UK initially agreed to a network-sharing deal in 2012 to accelerate the rollout of 4G. Meanwhile, Britain's other two networks, BT's EE and Three UK, have their own network-sharing agreement, set to expire in 2031, which does not include joint infrastructure upgrades.
Why it matters
The extended network-sharing deal and spectrum shift are significant steps towards securing regulatory approval for Vodafone's merger with Three, potentially reshaping the UK mobile market.
