4G LTE demand has prompted Telefonica to sign a network and service sharing deal with TeliaSonera in Spain.
The strategic deal is between TeliaSonera’s Spanish subsidiary Yoigo and Telefonica’s subsidiary Movistar.
Telefonica is Spain’s biggest telecoms operator. Yoigo is Spain’s No. 4 telecoms with 6.7 percent of the market.
The agreement will enable Yoigo to distribute Telefonica’s fixed services — voice and broadband, both ADSL and fiber — along with its own mobile services.
In addition, Movistar will be able to offer its customers faster mobile services on Yoigo’s 4G network.
Yoigo unveiled 4G in Madrid in July. In 2013 Yoigo’s 4G will be available to 48 percent of the Spanish population and will continue to grow in 2014.
At present, Movistar does not have 4G spectrum. Telefonica could not launch 4G as it did not have the spectrum as several television channels were using it.
To secure the desired access speed in the 4G network, Yoigo will contract Telefonica’s transmission capacity to its 4G sites.
The current national roaming contract for Yoigo to use Telefonica’s 2G and 3G networks, signed in 2008, has been extended to 2016.
Yoigo and Telefonica will sell their mobile towers to Abertis Telecom for $511 million to improve cost efficiency.
The tower deal will generate sales proceeds of EUR 60-70 million for Yoigo and reduce future operating costs.
TeliaSonera is yet to compete with Telefonica in the quadplay market as the later leads with its Fusion package.
The deal will reduce competition between the two.
The deal will shake up the market by placing Yoigo on a level to compete with Orange, Vodafone, Jazztel and ONO.
As part of 4G expansion, Telefonica’s O2 brand plans to launch superfast 4G mobile in London and two other British cities by the end of August.
