Two of the world's largest mobile phone companies, the Spanish company Telefonica and the British giant Vodafone announced on Monday that they will be sharing their infrastructure in various European markets to cut costs and protect profit margins.
The companies stated they have agreed to share networks in Germany, Spain, Ireland and Britain and are in midst of a detailed discussion about doing the same in the Czech Republic.
This agreement means that the companies will build new sites together or consolidate existing antenna-mast sites and infrastructure for second and third-generation networks, reducing the total number of cell phone antenna masts in operation and cutting the amount they pay to rent equipment.
But they will be managing their call traffic independently and still be competing against each other to attract and keep customers. There will be no job cuts from this partnership.
Vodafone, based in Newbury, England, is one of the world's largest cell phone companies, with about 289 million customers around the globe. Its businesses include a 45 percent stake in the U.S. carrier Verizon Wireless. Telefonica, based in Madrid, has about 260 million customers for its businesses, which include fixed-line telephone and broadband networks as well as mobile calling. It is the industry leader in Spain and much of Latin America.
The economic slowdown has forced the mobile phone operators to control their costs. In some markets, including the United States, network sharing has become mandatory to avoid losses. Two companies, American Tower and Crown Castle International, simplify the operations for many big U.S. cell phone operators by leasing access to the base networks they operate.
The European Union is also increasing its pressure on operators to reduce fees for many services. Last week, Vodafone and Orange said they would turn over the operation of their British mobile networks to Ericsson and Nokia Siemens Networks to cut costs. And Vodafone said in November it would seek to cut pound(s)1 billion, or $1.45 billion, of costs to improve its free cash flow.
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The companies stated they have agreed to share networks in Germany, Spain, Ireland and Britain and are in midst of a detailed discussion about doing the same in the Czech Republic.
This agreement means that the companies will build new sites together or consolidate existing antenna-mast sites and infrastructure for second and third-generation networks, reducing the total number of cell phone antenna masts in operation and cutting the amount they pay to rent equipment.
But they will be managing their call traffic independently and still be competing against each other to attract and keep customers. There will be no job cuts from this partnership.
Vodafone, based in Newbury, England, is one of the world's largest cell phone companies, with about 289 million customers around the globe. Its businesses include a 45 percent stake in the U.S. carrier Verizon Wireless. Telefonica, based in Madrid, has about 260 million customers for its businesses, which include fixed-line telephone and broadband networks as well as mobile calling. It is the industry leader in Spain and much of Latin America.
The economic slowdown has forced the mobile phone operators to control their costs. In some markets, including the United States, network sharing has become mandatory to avoid losses. Two companies, American Tower and Crown Castle International, simplify the operations for many big U.S. cell phone operators by leasing access to the base networks they operate.
The European Union is also increasing its pressure on operators to reduce fees for many services. Last week, Vodafone and Orange said they would turn over the operation of their British mobile networks to Ericsson and Nokia Siemens Networks to cut costs. And Vodafone said in November it would seek to cut pound(s)1 billion, or $1.45 billion, of costs to improve its free cash flow.
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