Vodafone and VMO2 sharing agreement makes the Vodafone Three merger a done deal

Vodafone and Virgin Media O2 have agreed to extend their network sharing agreement that has been operating for more than a decade. The agreement is subject to the approval of the merger between Vodafone and Three by the Competition and Markets Authority.

The agreement will be an irresistible carrot for the Competition and Markets Authority to approve the merger,

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 holdings 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.

Vodafone says the new sharing agreement will benefit Virgin Media O2 and MVNO customers who will enjoy improved coverage from Vodafone and Three’s planned £11 billion network investment. As long as the merger goes ahead, the operators have agreed that Virgin Media O2 will get spectrum from the merged network, establishing three scaled mobile network operators, each with better alignment of spectrum holdings.

A joint statement noted:

“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, including MVNOs who use 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.”

These benefits extend to both retail and wholesale MVNO customers.

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, leveling 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 are 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 we will now continue our engagement with the regulator in this spirit.”

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