“The deal reflects a continued and pragmatic shift in telecom businesses towards a more asset-light model of network ownership that balances scale with thrift.”
Vodafone and Telefónica UK (O2) plan to expand upon current partnership agreements to include 5G technology, so they can share fibre connections between both of their core networks in order to roll-out out 5G mobile services at a faster pace.
O2 and Vodafone have said that they plan to extend their network sharing partnership terms so they include the implementation of 5G technology at joint radio network sites. They believe that this will enable them to cover a wider geographical area and provide 5G services at a lower cost than their competitors.
Nick Jeffery CEO of Vodafone UK commented in a released statement that: “We believe that these plans will generate significant benefits for our business and our customers as we move into the digital era of connected devices, appliances and systems on a mass scale.”
The two companies have stated their intent to upgrade their current transmission network with improved capacity fibre optic cables. Both enterprise are also looking at deploying their own radio equipment in over 2,500 sites across the UK, an undertaken that will be done independently by both enterprises.
Tim Hatt, head of research at GSMA Intelligence commented to Computer Business Review in an emailed statement that: “The network sharing partnership means that the two companies can achieve sizeable cost savings by having a single backbone of towers, and through increased buying leverage with their network equipment suppliers.”
“This is particularly important for things like fibre optic upgrades which are necessary to realise key promises of 5G such as AR and VR that require ultra-low latencies not available with current generation LTE networks.”
Vodafone and O2 Seek Network Tenants
A key part of today’s announcement involves Vodafone and O2’s joint venture Cornerstone Telecommunications Infrastructure Limited (CTIL) which is tasked with consolidating the phone mast sites of both companies into a single grid.
Created in 2012, CTIL is a 50:50 split joint venture between the two enterprises, they stated today that they are looking into opening this up to other companies who wish to use the already established mast network. Marking the first step in a ‘potential monetisation’ of the infrastructure.
Tim Hatt states that: “The deal reflects a continued and pragmatic shift in telecom businesses towards a more asset-light model of network ownership that balances scale with thrift. The 5G era will see more shared and even leased access models of network operation given the heterogeneous demands from new high capacity small cells in dense urban centres to macro sites in suburban and rural areas – the hardest to reach.”
“The fact that Vodafone and O2 have also mooted the option of selling the JV that currently manages their shared tower estate (CTIL) is testament to this wider strategy of consolidating infrastructure ownership to free up cash for other purposes, be that paying down debt or strategic investment in new growth areas like IoT.”