Vodafone agrees new Virgin Media O2 tie-up to ease competition concerns
Writes through and adds detail on spectrum holdings and network-sharing deals in paragraphs 3,8,9
LONDON, July 3 (Reuters) -Britain's Vodafone VOD.L and Virgin Media O2 have agreed to extend their network-sharing deal to the mid-2030s, including a spectrum shift that could help Vodafone to win regulatory approval for its tie-up with mobile operator Three.
The $19 billion merger between Vodafone's UK operation and Hutchison's 0001.HK Three UK is the subject of a Competition and Markets Authority (CMA) investigation.
Under the new network-sharing deal, an enlarged Vodafone-Three entity would sell some of its combined 59% of the best spectrum for 5G networks to Virgin Media O2, which has the lowest share.
That could help to address the regulator's concerns about a merger that would reduce the number of mobile networks in Britain to three from four.
"We believe that this new agreement addresses the issues we have voiced and the CMA outlined in its initial decision," said Lutz Schuler, CEO of Virgin Media O2.
Vodafone said the network-sharing deal would allow customers of Virgin Media O2 to benefit from the 11 billion pound ($14 billion) investment plan in 5G networks that it has pledged if the Three merger is approved.
"The proposed merger, together with this agreement, will boost competition by establishing a strong third player in the UK mobile market," said Ahmed Essam, Vodafone's CEO of European Markets.
Vodafone and Telefonica UK agreed a network-sharing deal in 2012 to accelerate the rollout of 4G. Vodafone later transferred its stake to its Vantage Towers VTWRn.H spin-out while Virgin Media O2, owned by Telefonica TEF.MC and Liberty Global LBTYA.O, sold part of its stake to GLIL Infrastructure last year.
Britain's other two networks - BT's EE and Three UK - set up their own network-sharing agreement in 2007. They agreed a less extensive deal last year that does not include joint infrastructure upgrades. It expires in 2031.
($1 = 0.7873 pounds)
Reporting by Sarah Young and Paul Sandle
Editing by Jason Neely and David Goodman
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