Vodafone agrees to sell Hungarian unit for USD 1.8 billion
16 January 2023
13 February 2023
In the fast-changing world of telecommunications, staying ahead of the curve is essential. One way mobile operators are achieving this is by sharing infrastructure. By collaborating and pooling resources, these companies can achieve several key benefits, both for themselves and for their customers.
Sharing infrastructure can significantly reduce costs. Building and maintaining cell towers, data centres and other telecommunications infrastructure is expensive. By working together, mobile operators can spread these costs, making it more affordable for each company to provide the services their customers need. Sharing infrastructure can also improve coverage and capacity. By sharing resources, mobile operators can extend their reach and provide better service to customers in remote or rural areas. This is particularly important in countries where the population is spread over large areas. By sharing infrastructure, mobile operators can ensure that everyone has access to fast and reliable mobile networks, no matter where they are.
Among other things, sharing and carve-out of infrastructure can help mobile operators to focus on the end customer and invest in new services, and last but not least, it can also improve the overall quality of service. By working together, mobile operators can ensure that their networks are reliable and that they can provide fast and seamless connectivity to their customers. This can help reduce outages and improve the overall user experience.
In the Czech Republic, for example, T-Mobile and O2 have been sharing their networks since 2011. In 2015, O2 CZ transferred its mobile infrastructure to CETIN, which operates as a network infrastructure manager and operator and belongs to the same group. Vodafone strongly objected to the deal and in 2016 the European Commission launched an investigation. In 2019, it said that the deal, according to its preliminary conclusions, restricted competition.
Last year, the European Commission recognised the benefits of network sharing, such as faster network deployment, cost savings and better coverage. However, it said such cooperation can also weaken the incentive for mobile operators to independently improve their networks, services and technologies. The companies have therefore offered measures to address allegations of restricting competition, committing to upgrade mobile network equipment, remove financial barriers to unilateral network deployment and limit information exchange to the minimum necessary to operate a shared network. Over the next seven to ten years, the firms are also expected not to include Prague and Brno in their current network sharing, and each is to separately deploy 2G, 3G and 4G networks in these cities for the benefit of consumers. CETIN is to prevent information spillover between the two operators.
Network sharing agreements are a common practice in the telecommunications industry, allowing operators to reduce costs and facilitate network expansion. It usually benefits consumers by bringing faster network growth, cost savings and coverage of rural areas. However, it can also have a negative effect on competition and weaken the incentive for mobile operators to independently improve their networks, services and technologies.
"Especially at a time when rising energy prices mean significant cost increases for operators, infrastructure sharing or strategic partnerships are an appropriate way to meet these challenges and maintain quality of service to the end customer."
-Jan Kudlák, TMT Deloitte Leader