Telecom Lead Europe: In a bid to cut costs, mobile operators Vodafone and Telefonica will create a shared 4G network in Britain.
The sharing of infrastructure will enable the struggling mobile giants to improve existing coverage and speed the roll out of superfast broadband networks.
The two groups had an agreement to share new network sites.
They will strengthen their partnership by pooling their basic network infrastructure to take their national population coverage to 98 percent by 2015.
“Exceptional customer demand for the mobile internet has challenged the mobile industry to consider innovative solutions to building a nationwide network that will be fit for our customers in the future and support the products and services that will truly make Britain digital,” said Ronan Dunne, chief executive of Telefonica UK.
The agreement will also allow the groups to build two competing 4G LTE networks faster than could have been achieved independently.
This is an entirely sensible move by Vodafone and Telefonica in the UK. In fact, we did predict this as early as 2008, when we said that most countries would end up with only two physical LTE networks. It follows on from the merger of T-Mobile and Orange in the UK into Everything Everywhere. If Vodafone and Telefonica had not also embraced sharing in this way they would have been at a competitive disadvantage. As it was, they were able to build on and extend the relationship that they already had through Cornerstone, their existing joint venture. This sets them up well for the 4G rollout and will help them catch up on 2/3G rollout to,” said Jeremy Green, principal analyst at Ovum.
Both operators stress that it has no implications for their relationship elsewhere, and that they will continue to compete on services. This move follows the logic of network economics and technological possibility, and is what the near future is going to look like,” Green added.
The deal will keep costs down for both groups at a time when they are struggling with weak customer spending in Europe.
Telefonica revenue up 3.5% to 62.83 billion euros in 2011
Telefonica has posted 3.5 percent increase in revenues to 62.83 billion euros in 2011. The company’s wireless data revenues grew 19 percent. The marginal growth was driven by the increase in wireless data revenues, which accounted for more than 31 percent of mobile service revenues, and growth in Latin America, a region which already represents 47 percent of total consolidated revenues and 48 percent of the Telefonica Group’s OIBDA.
Vodafone slashes revenue outlook due to regulatory pressure and lower demand in Europe
Recently, Vodafone lowered medium-term target for revenue growth mainly due to the drop in customer spending in southern Europe and the increasing pressure from regulators. The company’s group organic service revenue from the provision of ongoing services to customers was up 1.5 percent in the year, with Europe down 1.1 percent and Africa, Middle East and Asia Pacific up 8 percent.
In India, the telecom major is facing severe financial crisis following the tax controversy surrounding the Hutchison buy. Vodafone U.K. is facing Rs 20,000 crore tax demand in India following the controversial tax issue.