Orange Partners With Vodafone To Slash Capital Expenditure Costs

Vodafone and Orange are all set to pen a new deal that will allow the two companies to share the costs of engineering, maintenance, and technology, for their network stations in UK.

The move, which is said to be announced shortly, is likely to save Vodafone a massive £1 billion a year, which could be very crucial at the time when majority of economies in Europe are tumbling due to competitive pressures.

Though the companies already share costs of operating some features of their base stations, the new deal is expected to extend the scope of their partnership that may include integration of their 3G networks, and certain collaboration in deploying and managing their international network coverage.

While investors are sceptic about Vodafone’s growth during this ongoing slump in global economy, there are hardly any facts that suggest shortfall in consumers’ calling and texting activities.

Earlier, Vodafone’s new CEO Vittorio Colao, who has took over from Arun Sarin recently, noted that the network operator would cut company costs up to £1 billion by 2010-11, with an aim to make Vodafone much “faster” and “simpler”, so as to deal with soaring competitive and economic pressures.

It is believed that Colao will initiate his much-touted cost cutting plans throughout the year, and it will include some considerable price-cuts in supply chain department, along with a few job losses.

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Our Comments

Three and T-Mobile have done in the past. Now two bigger telecommunication companies have agreed to collaborate to trim costs. This will benefit customers by improving coverage nationwide and speed up costly upgrades. But expect jobs to go and telecoms suppliers to suffer from reduced activity.

Related Links

Vodafone, Orange close to network cost sharing deal – report

(Telecom Papers)

Vodafone set to sign deal with Orange to share costs

(Guardian)

Vodafone to cut costs in UK Spain and Italy during 09

(Phones Review)

Vodafone expected to start cost-cutting strategy in January 2009

(Mobile Today)