Vodafone and O2 To Merge Operations To Cut Costs

In what seems to be the biggest shake-up in the UK’s telecom industry since the advent wireless broadband networks at the beginning of this decade, Vodafone and O2 are planning to pool their networks, according to the Guardian.

The Guardian reported that the discussions between the two telecom operators were at “an advanced stage”, with the final announcement is expected to be made in a couple of weeks or so.

The website further notified that Vodafone’s current partner, Orange, is planning to ask T-Mobile and 3, a division of Hutchison Whampoa Ltd, for their permission to connect with their network sharing venture, potentially leaving UK with five of its top most broadband operators using two networks only.

Although, all five operators continue to function under their own brand names, but any such collaboration would enable the companies to bring down their 51,000 base stations across the country, which eventually help in reducing operational costs substantially, the Guardian added.

However this collaboration would surely lead to much cheaper calls and reduced internet costs, this could spark concerns amongst consumer groups over reduced competition.

The website further asserted that both the Office of Fair trading and the Competition Commission were likely to evaluate the two deals to check if they amounted to a merger that would hamper the competition in UK.

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Our Comments

Expect hundreds of jobs to go if these rumours become true. Since only a fraction of the mobile masts and hardware will be used, Vodafone and O2 won't need as many engineers and back end staff. This could potentially mean better reception and coverage in the long term but not necessarily cheaper prices. However, one can guess that MVNO's like Asda or Virgin, could potentially thrive.

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