One of the key commitments made to UK comms regulator Ofcom to see the merger between telcos Vodafone UK and Three UK cross the line has just been completed, with Virgin Media O2 (VMO2) announcing details of a spectrum transfer agreement with Vodafone UK that will see it acquire 78.8MHz of spectrum for an investment of £343m.
Specifically, VMO2 will acquire the following spectrum bands from Vodafone UK: 20MHz of 1400MHz supplemental downlink; 18.8MHz of 2100MHz frequency division duplex; 20MHz of 2600MHz time division duplex; 20MHz of 3400MHz time division duplex.
The deal, which is subject to Ofcom approval, is said to materially enhance VMO2’s network position and help evolve the connectivity experience of consumers and businesses across the country. The transfer is part of a wider deal struck between Virgin Media O2 and Vodafone UK in July 2024, when the parties agreed to extend and enhance their existing mobile network sharing arrangement for more than a decade. Following the completion of the merger, the new VodafoneThree will now participate in that network sharing agreement.
Elements of the agreement expand on the existing arrangement between Vodafone UK and Virgin Media O2 – seen in the extension of the Shared Rural Network in so-called hard-to-reach areas of the UK – and are independent of the Vodafone UK and Three UK merger outcome.
The spectrum acquisition is also designed to improve the balance in spectrum holdings across the UK’s three mobile operators, enhancing competition, coverage and choice for consumers and businesses, bringing VMO2’s total mobile spectrum share to approximately 30%. The company said this will ensure the UK has three scaled mobile network operators with a greater balance in terms of spectrum holdings.
VMO2 regards its spectrum acquisition, incremental to its existing investment of more than £2bn in its networks and services, as a way to bolster the quality of its mobile coverage across the country and deliver improved services for its customers through increased capacity, speeds and greater coverage. Stated anticipated benefits for businesses extend to the mobile virtual network operators (MVNOs) – such as Sky Mobile, Lebara and Lyca Mobile – that make use of networks via wholesale partnerships to deliver mobile services to millions of people across the country.
The spectrum purchase will be partially funded by the 2024 minority stake sale in its Cornerstone Telecommunications Infrastructure mobile tower joint venture, with spectrum payments extending beyond 2025 and deployment occurring over the medium term, starting this year.
Commenting on the acquisition, Virgin Media O2 CEO Lutz Schüler said: “This acquisition of spectrum will not only create greater balance in holdings across the UK’s mobile networks, but for Virgin Media O2, it will allow us to boost coverage and further improve our network quality, building on the significant investment we are already making in our mobile network. We’re committed to giving our customers a reliable mobile experience across the country, and this increase in spectrum will help us deliver on that.”
Vodafone and Three first announced plans to merge in June 2023, and the new combined business will operate under the VodafoneThree brand, with 51% owned by Vodafone Group and 49% by CK Hutchison Group Telecom (CKHGT) Holdings. Vodafone will fully consolidate VodafoneThree in its financial results, and the company’s CEO will be Max Taylor, who currently leads Vodafone UK. Three UK’s Darren Purkis has been appointed chief financial officer (CFO).
Backed by an £11bn infrastructure investment – one of the key guarantees by the two companies to gain closure of the deal from UK regulatory authorities – to connect all four nations and every community, VodafoneThree will be the biggest mobile network operator in the UK, with 27 million customers.
