VMO2 in favour of Vodafone Three merger, agrees to acquire spectrum from new operator

VMO2 in favour of Vodafone Three merger, agrees to acquire spectrum from new operator

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Virgin Media O2 (VMO2) has extended its network-sharing agreement with Vodafone UK and will acquire spectrum from a merged Vodafone/Three if a deal is greenlighted by the UK’s Competition and Markets Authority (CMA).

VMO2 was conspicuous by its absence when the CMA published responses to its issue statement on the tie-up of the UK’s third and fourth largest mobile network operators, but in a statement today said the deal 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,” in rhetoric similar to the two merging parties.

The new network sharing agreement “significantly extends” the current agreement between Vodafone UK and VMO2.

Although the agreement is independent of the merger being waved through, if approval is granted then the merged entity of Vodafone and Three (MergeCo) will be permitted to participate in the agreement.

In this instance, VMO2 will also acquire spectrum from MergeCo at market value, a condition that was widely expected to be mandated by the CMA anyway.

VMO2 further expressed its approval of a merger by saying the network sharing agreement will extend benefits from MergeCo’s committed £11 billion network investment plan to its own customers and to the mobile virtual network operators (MVNOs) with whom the operators have wholesale partnerships.

It also said the agreement and formation of MergeCo will significantly enhance competition in the retail and wholesale mobile markets.

In a statement to Capacity, Massimo Fatato, head of networks at NTT DATA UK & Ieland agreed that the agreement would be good news for the UK’s MVNOs, whom he said were grappling with spiralling costs and tougher competition.

“This partnership, along with MergeCo and VMO2’s multi-billion pound investment in networks and services, will demonstrate how long-term collaborations can provide much-needed stability for operators to open up new streams of revenue, while continuing on the path of improving customer experience with a more granular, optimised and efficient network coverage,” he said.

VMO2 has pledged £2 billion annual investment in its own network.

Lutz Schüler, VMO2’s CEO said the 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 mobile operator partners across the country.

“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,” he added.

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