Vodafone UK and Virgin Media O2 (VMO2) revealed a plan for the latter to buy spectrum assets from the company set to be created from a proposed merger of the former with 3 UK, a move seemingly designed to address regulatory concerns about cutting the number of operators in the market.

Sale of the spectrum assets will be at market value and is subject to the completion of the combination of Vodafone UK with 3 UK, which is currently going through authorities.

Announced alongside the extension of a long-running network sharing pact between VMO2 and Vodafone, the potential spectrum deal was positioned by the pair as resulting in “three scaled mobile network operators each with better alignment of spectrum holding”.

The other scaled player being referred to is BT Group, which has been highly critical of the prospect of Vodafone and 3 coming together.

In its initial assessment of the deal the UK’s Competition and Markets Authority raised concerns about what it termed a potential substantial lessening of competition, alongside worries of a knock-on impact on the MNVO segment.  

Rebalance
The agreement announced today (3 July), together with pending merger, was promoted by the players involved as rebalancing the mobile market and benefiting both VMO2 and the MVNOs served by it.

It will “ensure these virtual operators have access to a choice of three high-quality, scaled wholesale competitors, further supporting an already thriving MVNO segment in the UK,” they added.

Vodafone CEO for European Markets Ahmed Essam said its moves and approval of the pending merger would establish a “strong third player in the UK mobile market” and level the playing field.

VMO2 CEO Lutz Schuler added: “We are extending and bolstering elements of our existing network sharing arrangement, while also ensuring there is a robust, balanced and functional structure in place for the long-term should Vodafone and 3’s proposed merger gain consent”.

“We believe that this new agreement addresses the issues we have voiced and the CMA outlined in its initial decision, and will now continue our engagement with the regulator in this spirit.”

Most aspects of the extended network sharing agreement between Vodafone and VMO2 are applicable regardless of whether the former’s deal with 3 ends up going through.