Vodafone and O2’s parent company Telefónica have won approval for their plans to launch a new national grid that combines the existing network infrastructure of both firms. Ofcom and the Office of Fair Trading formerly sanctioned the merger which allows the operators to upgrade their services and eventually take on EE in the 4G LTE market.
The two companies can now push ahead with their plans to share 18,500 masts on one giant grid, which was first proposed in June. Since then, rival EE (formerly Everything Everywhere) has been given the green light for its 4G network rollout which is currently underway, forcing a disgruntled O2 and Vodafone to play catch up in the high-speed data stakes. They have been forced to wait for Ofcom’s auction of the UK's remaining 4G spectrum bands before launching competing services, but the long-term benefit for the firms could be sizeable if they can convince consumers the new grid offers superior coverage.
Despite the pooling of respective infrastructure - which will see Telefónica manage the network across of the east of England, Scotland and Northern Ireland, and Vodafone control the west of England and Wales - O2 and Vodafone will continue to offer separate products and services and shall “actively compete” with each other in the market.
While the merger “lays the foundations” for each operator’s own 4G network, improvements to existing technology is also touted as a result of the deal, with indoor 2G and 3G coverage promised to 98% of the UK population by 2015.
“This is excellent news for British consumers, businesses and the wider economy,” said Vodafone CEO Guy Lawrence. “We will bring the best mobile coverage that this country has ever enjoyed to more people than ever before. Our existing customers will benefit on the devices that they have today and we will lay the foundations for the real 4G network they will want tomorrow.”
Lawrence’s counterpart at Telefónica UK, Ronan Dunne, commented, “One physical grid, running independent networks, will mean broader coverage and, crucially, investment in innovation and better competition for the customer. We look forward to Ofcom’s spectrum auction and the release of 800 spectrum.”