The increasing cost pressures could result in a partnership between Vodafone and O2 on the lines of the T-Mobile – 3 UK arrangement. A report, which appeared in the Guardian, says that the two companies are discussing the possibility of sharing their infrastructure with each other to lower their cost of operation. This could be good news for the rural customers of the two companies, as the deal would mean seamless network coverage across the UK for both companies.

As part of the arrangement, both Vodafone broadband and O2 broadband would maintain their market identity, i.e. their brand names will not be merged, and their packages are also likely to remain the same. However, the big difference will be the way in which the companies run their technical operations, as after the deal they will be able to consolidate their resources and investments to manage the network infrastructure more efficiently.

The potential partnership would leave Orange as the only major standalone player in the market and it is expected that it too would be forced to enter the T-Mobile – 3 UK alliance, so that it does not get left behind in this highly competitive market. This could have the Competition Commission sit up and take notice, as the two major network alliances would control almost the entire market share in the UK, giving them considerable pricing power. The deal would also need an approval from the Office of Fair Trading, but the general belief is that it would eventually go through.

This entry was posted on Friday, March 20th, 2009 at 11:01 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.