The Irish subsidiaries of Vodafone and Hutchison Whampoa have become the latest mobile operators to form a network infrastructure joint venture.
The 50/50 JV will see Vodafone Ireland and Three Ireland pool their network infrastructure together across…
The Irish subsidiaries of Vodafone and Hutchison Whampoa have become the latest mobile operators to form a network infrastructure joint venture.
The 50/50 JV will see Vodafone Ireland and Three Ireland pool their network infrastructure together across roughly 2000 sites in the country to cut costs.
With duplicate sites being decommissioned, the venture, which plans to be fully operational in the autumn, is thought to be eyeing savings of around £250m within a five-year period.
Both companies will, however, continue to run their own radio equipment and spectrum independently of each other.
Vodafone Ireland CEO Jeroen Hoencamp said the agreement will mean both parties can focus on the “intelligent part” of their networks.
“We believe this partnership will place both companies in a stronger position to commit to future investment in our network, and the products and services we provide to customers,” said Hoencamp.
Robert Finnegan, CEO of Three Ireland, highlighted how the deal will create the largest physical network in the country.
“As a result of this agreement we expect to be able to deliver the latest technologies to our customers faster than ever before,” he said.
The JV is not expected to require regulatory approval. However, it will become operational only later this year because, from 16 July, mobile operators in the country are prohibited from coordinating with each other until the conclusion of autumn’s Irish 4G auction.
Although the JV is the first of its type in Ireland, competing telcos in other markets are increasingly consolidating their infrastructure to generate cost efficiencies to rapidly roll out 4G services.
Infrastructure sharing boom
In the UK, Telefonica and Vodafone announced last month that they were planning their own 50/50 infrastructure JV. Their agreement would give each group access to 18,500 masts, representing a 40% increase for both.
Another similar partnership was also announced in June, when wireless operator Iusacell formed a strategic alliance with Telefonica in Mexico. Through sharing infrastructure, such as wireless towers and fibre-optic cables, these companies plan to better compete with the dominance of Carlos Slim’s America Movil in the country.
Meanwhile, in the Netherlands, Vodafone and KPN, the country’s incumbent operator, announced plans today for a pilot to evaluate the possibility of sharing their infrastructure.
According to Informa analyst Francesco Radicati, network sharing is becoming more common because operators are fighting harder for profit as the cost of carrying mobile traffic increases.
“We expect this trend to accelerate, as operators seek to cut costs by reducing infrastructure and capex where possible,” said Radicati.
“This need is particularly pressing in Ireland, as the recession is putting pressure on operators’ revenues, with Vodafone seeing a year-on-year service revenue decline of nearly 1% this year, while retail revenues fell by 2.5% overall during the same period. For Three, by contrast, these deals are more a matter of survival, as the company finds it harder and harder to compete from the position of a challenger.”
