Vodafone UK and Virgin Media O2 have reached a landmark agreement to extend and enhance their mobile network sharing arrangement for more than a decade. This agreement builds on the companies’ existing partnership and is designed to deliver improved coverage, capacity and service quality across the UK.
Although the deal largely stands apart from the proposed merger between Vodafone UK and Three UK, it contains provisions that would allow Virgin Media O2 to purchase spectrum from the combined entity (MergeCo) if regulators approve that merger. Those provisions are intended to rebalance spectrum holdings and support wider competition across the market.
Ahmed Essam, CEO of European Markets at Vodafone, said the combined arrangements — the network-sharing agreement with Virgin Media O2 and the proposed merger with Three — will transform the mobile experience for more than 50 million UK customers for the long term. He said customers will benefit from greater choice, better quality and broader coverage nationwide.
Essam added that the arrangement will strengthen competition in both retail and wholesale markets. “The proposed merger, together with this agreement, will boost competition by establishing a strong third player in the UK mobile market and will improve the balance of spectrum holdings, levelling the playing field between the UK’s mobile operators,” he said.
Virgin Media O2’s CEO, Lutz Schüler, echoed those sentiments, describing the deal as a way to enhance network choice, performance, coverage and competition “to the benefit of millions of consumers, businesses and our mobile operator partners across the country.” Schüler said the agreement also responds to concerns raised by the Competition and Markets Authority (CMA) about the Vodafone-Three transaction and will be part of ongoing discussions with the regulator.
A major element of the overall plan is significant network investment. Subject to CMA approval, MergeCo has committed to investing £11 billion in its network over the next decade. At the same time, Virgin Media O2 will continue to invest around £2 billion a year in networks and services. These capital commitments are expected to improve the underlying infrastructure that customers and partners depend on.
The agreement is intended to produce benefits beyond the direct customer bases of the two companies. In particular, it aims to support the broader mobile ecosystem, including Mobile Virtual Network Operators (MVNOs) that depend on wholesale access to deliver services to millions of UK consumers. By preserving robust wholesale competition, the deal is designed to help MVNOs continue to offer differentiated services and innovate.
Massimo Fatato, Head of Networks at NTT DATA UK&I, welcomed the move and highlighted its potential to provide stability and new revenue opportunities for virtual operators facing rising costs and tougher market conditions. He said long-term partnerships, combined with multi‑billion pound network investment, will enable operators to deliver a more granular, optimized and efficient network experience while giving MVNOs access to scaled, high-quality wholesale competitors.
“This partnership ensures that virtual operators will have access to three high-quality, scaled wholesale competitors. That is crucial for maintaining a thriving MVNO segment in the UK, enabling these businesses to innovate on a stable foundation and offer new mobile services to millions of consumers nationwide,” Fatato said. He added that collaborative approaches and strategic financial management will be essential as the industry evolves.
As part of the arrangement, Virgin Media O2 would be able to buy spectrum at market value from MergeCo if the merger goes ahead. This planned reallocation of spectrum aims to address current imbalances in spectrum distribution among UK mobile operators, which could lead to improved competition and higher service quality across the sector.
See also: Dutch 5G auction: KPN, Odido, and VodafoneZiggo secure crucial spectrum
Unified Communications is a two-day event held in California, London and Amsterdam that explores the future of workplace collaboration in a digital world. The event is co-located with Digital Transformation Week, IoT Tech Expo, Edge Computing Expo, Intelligent Automation, AI & Big Data Expo, and Cyber Security & Cloud Expo.
Explore other upcoming enterprise technology events and webinars powered by TechForge.