Vodafone UK deepened a network sharing partnership with Telefonica UK to cover 5G in a bid to enable faster deployment of the technology at a lower cost, as both companies look to step up competition with market leader BT.
In a statement, the operators said they had entered into a non-binding agreement to extend their existing network sharing partnership to include 5G at joint radio network sites. A final deal is subject to parties agreeing detailed terms and receiving regulatory approvals, which is expected to be concluded during 2019.
The move is designed to enable both Vodafone and Telefonica’s O2 to deploy 5G faster, offer the service to more customers over a wider geographical area, and to do so at a lower cost.
While they will deploy separate radio equipment at approximately 2,500 sites, the operators will look to extend “greater network autonomy in a number of larger cities”, through the partnership.
The 2,500 sites represent around 15 per cent of total sites outside of capital London.
Vodafone and O2 also committed to upgrade transmission networks with higher-capacity optical fibre cables, which they believe will enable customers to benefit from some of the touted advantages of 5G such as low latency.
The companies first established a joint venture in 2012, dubbed CTIL, to share network deployment costs. They said they will explore “potential monetisation of CTIL after the new agreements have been finalised”.
Vodafone UK CEO Nick Jeffery and Mark Evans, CEO of Telefonica UK, said the 5G partnership enables the operators to more effectively use spectrum acquired in the UK’s most recent auction.
The 5G race is hotting up in the UK, with the country’s four major operators targeting a launch this year.
BT’s EE aims to be first to launch, previously revealing plans to deploy the technology in 16 cities across the country this year.
GSMA Intelligence forecasts 5G will account for 43 per cent of mobile connections in the UK by 2025, well above the European average of 29 per cent.
“To achieve this, UK operators will need to spend £4 billion in capex and that doesn’t include new spectrum,” said GSMAi analyst Tim Hatt. “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.”