Vodafone switches on its 5G network at Gatwick Airport

The south terminal of Gatwick Airport is now ‘5G ready’ according to Vodafone, as the gradual roll-out of 5G across the UK continues.

Whether or not the ability to download stuff a bit quicker in ne part of one UK airport is enough to persuade punters to buy a Vodafone 5G subscription is up for debate, but you have to start somewhere. The Vodafone press release is heavy on the standard rhetoric around network upgrades, with gushing talk of downloading every move ever made in a nanosecond, so the company is clearly viewing this as a marketing opportunity.

“We are delighted to support Gatwick Airport’s ambition to become one of the world’s leading smart airports with our investment in 5G,” said Vodafone UK CTO Scott Petty. “The installation of hundreds of kilometres of fibre at the airport will enable us to offer great coverage to the millions of people who use Gatwick Airport each year, as well as to connect its systems and vehicles on site. For example, by connecting mobility carts, airport staff will know where they are at all times, meaning they are better able to help passengers who need support.”

John Barton, Chief Information Officer, Gatwick Airport, said: “We are delighted to announce yet another world-class facility at Gatwick with Vodafone’s new 5G network now available in the South Terminal,” said John Barton Gatwick Airport CIO. “Passengers using the network will benefit from super fast speeds when surfing the web and downloading files, or even box sets to provide video entertainment during one of the many long haul flights that depart from the airport.

“5G also has the potential to unlock a wide range of new capabilities and to reliably connect everything around us to a network many times faster than those it replaces. Many of the 250 companies based on the Gatwick campus can also benefit from this super fast 5G service, including those that rely heavily on mobile applications for their day to day business.”

That’s it really. As you can see from the canned quotes the emphasis is entirely on the enhanced mobile broadband side of things, which is unlikely to excite too many people with a decent 4G service. More exciting to users of the airport might be a public wifi service that isn’t such a nightmare to log into that you’re reduced to actually talking to people instead.

Aussie regulator not in the ‘real world’ over Vodafone and TPG

Lawyers representing Vodafone Australia and TPG have suggested the Australian competition watchdog is not living in reality as it continues quest to force in a fourth MNO.

Last year, Vodafone and TPG announced intentions to merge operations in pursuit of creating a business which can offer comprehensive services in both the mobile and fixed segments. The pair were searching for ‘synergies’, seemingly a play to compete in the world of convergence, but the Australian Competition and Consumer Commission disagreed, blocking the merger four months ago.

The ACCC rationale was relatively simple; if the pair are forced to continue to operate independently, they could potentially fund their own fixed and mobile networks, broadening competition across the country. Vodafone and TPG suggest this is not the case.

“What TPG wants is for this merger to go through but when you step back and look at the options and approach it had before August 2018… it is entirely commercially realistic that TPG will return to rolling out a mobile network,” said Michael Hodge, representing the ACCC in court.

However, the opposition hit back.

“There isn’t a real chance that TPG will pursue the rollout of a mobile network. There is not a real chance that TPG will become Australia’s fourth network,” said Inaki Berroeta, Vodafone Australia CEO.

The dispute here is simple. The ACCC wants four, independent MNOs across the country. TPG made some noise about deploying its own network prior to the merger announcement, though these ambitions were seemingly quashed by the ban on Huawei technology in the country.

“TPG did try to build it, but it was thwarted by community objections, by technical difficulties but ultimately by the federal government’s security guidance,” Ruth Higgins, the legal representative of TPG, said.

Vodafone and TPG do not believe they can compete with Optus and Telstra without a merger, though the ACCC is under the impression a fourth MNO will emerge organically.

TPG did announce in May 2018 it was planning to launch its own mobile network, learning from the success of Reliance Jio in India. The idea to attract subscribers was to offer six months of data and voice services for free, though this idea was killed off due to two developments.

The first development was the merger between Vodafone and TPG. Why would it build its own mobile network when it could dovetail with Vodafone, bringing its own fixed network to the party to complete the convergence dream.

The second development was the banning of Huawei technology in Australia.

“It is extremely disappointing that the clear strategy the company had to become a mobile network operator at the forefront of 5G has been undone by factors outside of TPG’s control,” TPG Executive Chairman David Teoh said at the time.

Following the decision, TPG decided against building its own mobile network as Huawei was the main supplier to the firm. This is an instance which backs up the Huawei claims it will improve competition in the 5G vendor ecosystem, bringing down the price of equipment investment and speed of deployment.

The decision to end TPG investment in a mobile network might have been enough to convince the ACCC the merger could be approved, but it seems the competition watchdog is clinging onto the hope it would do so on its own. TPG statements should be taken with a pinch of salt, it wouldn’t be the first-time executives changed their minds, but it does run the risk of negatively impacting competition.

One thing which is not healthy for any market is a tiered ranking system. If Vodafone cannot compete with Optus and Telstra without the converged business model the TPG assets offer, it might well fall further behind. If it dwindles to the point of irrelevance, the Australian telco market will be in a worse position than it is today, or with the combined Vodafone/TPG company offering increased competition. The risk the ACCC runs is effectively creating a duopoly.

Realistically, there is no right or wrong answer here. We do not have a crystal ball, and we cannot read the minds of TPG executives. It might well pursue the deployment of a mobile network if the prospect of a merger is killed off all together, but then again, it might just double-down on fixed line investments. It does currently have an MVNO, but that is a poor substitution for a fourth MNO to increase competition.

Vodafone challenges new Ofcom rules on leased line rates

Vodafone has lodged a complaint with the Competition Appeal Tribunal, challenging new rules which it believes will give Openreach too much opportunity to abuse customers.

Following the latest Business Connectivity Market Review rules published in June, Ofcom granted Openreach greater freedoms to charge customers more for leased lines. These leased lines underpin home broadband, cloud hosting and 5G, as well as services offered directly to the citizen, such as banking, healthcare, and local and central government online services.

“Ofcom has now changed its approach and is regulating based on what it hopes will happen in the future, rather than based on the evidence of how the market works now,” Vodafone said in a press release.

The relaxation of rules has been based on various investigations over the last few years, though Vodafone has found issue with a few points.

Firstly, the Business Connectivity Market Review suggests Openreach does not have significant market power in the London region. Vodafone disagrees with this, suggesting market share of between 60% and 70%, exceeding the levels defined as market domination by Europe.

Secondly, Vodafone disagrees about the removal of a cost-based price cap in favour of a flat rate price cap. The cost-based approach was much more fluid, moving with the real cost realised by Openreach. Vodafone suggests Openreach costs are only going down, therefore the wholesaler will benefit significantly from the change.

Finally, in some cities Ofcom expects competition to enter the fray, therefore pricing regulations have been loosened. From Vodafone’s perspective, the facts are simple; competition hasn’t yet entered the market, and the regulations should be kept in place until they actually do.

In some parts of the saga, Ofcom has perhaps acted slightly irresponsibly, though you always have to remember this is a PR assault from Vodafone. Weaponising the press, as Vodafone is trying to do here, is often accompanied by emotive language, exaggeration and quoted figures which push right to (or perhaps beyond) the edge of estimate ranges.

This is not to say they will not prove to be accurate, but it is always worth remembering the presence of massaging and manipulation.

Vodafone Spain rumoured to be considering fixed network sale

The rumour mill is churning at maximum speed as Vodafone Spain is reportedly considering a sale of its fixed network for €1.2 billion.

It would appear to be an unusual move. With many national business units shifting towards a convergence business model, divesting its fixed networks assets would take the Spanish unit the other direction.

According to Spanish news site Expansion, the business is currently undergoing a restructure, owing to difficult market conditions, and the sale of the fixed network could certainly add some much-needed cash into operations.

“Currently there is no project that is working on the complete sale of the network proactively, although possibilities are always being analysed and studied to find efficiencies and improve the profitability provided by assets, such as the possible partial sale,” a spokesperson said.

The Spanish market is a tricky one to master currently. After the management team deemed renewing TV rights for the Champions League and La Liga football competitions were deemed unprofitable, Vodafone Spain lost 71,000 TV customers almost immediately, though the mobile business did grow gradually over the course of 2018.

Looking at the most recent financial results, alongside Italy, Spain is proving to be the problem child of Vodafone’s European family. Year-on-year revenues declined by 9.3% for the second quarter of 2019, though tariffs have been overhauled to create a more competitive proposition.

However, alongside the new data tariffs, Vodafone’s rivals launched their own promotions which appear to be much more attractive. Over the three-month period, Vodafone lost two corporate accounts, 158,000 postpaid mobile subscribers, 49,000 fixed broadband customers and 24,000 TV customers.

Although these rumours are far from a sign anything will actually happen, we’ll wait for a potential buyer to make themselves known before investing too much energy, it does seem to be a strange move. Vodafone does of course need cash ASAP, though if it still wants to persist with the convergence strategy in Spain it would have to enter into a leasing agreement with one of the other network owners should the sale go through. It does appear to be somewhat short-sighted.

EE forced to backtrack on 5G data tariffs

It does appear EE has been forced into a rethink on 5G data pricing, as the firm launches an unlimited data offering to keep pace with rivals in the UK.

Like hamburgers at breakfast, the 5G tariffs didn’t look right to start with. The price points were too expensive for today’s cash conscious consumer who expects the world for tuppence. EE might have been first out of the gate to capitalise on the growing 5G euphoria and earn the right to boast about being first, but it has been forced to backtrack a little.

The only issue with being first is that you give everyone else a taste of what is on the table. Even if EE had nailed the proposition and priced it perfectly, it left the door open to be embarrassed by rivals to be undercut. If the aim of the game was to secure post-paid subs and look to long-term ROI, EE left itself exposed to a cheap shot.

That said, it has now seemingly rectified the situation.

When it first launched in May, prices were tiered depending on download limits. Not only did it not look practical, limits would be reached relatively easily, it was expensive. Admittedly the price of 5G devices were factored in, but with rivals presenting options which were easier on the wallet, a new approach was needed.

“If you want an unlimited data plan, you should get it on the UK’s best network, with the coverage and speeds that let you make the most of it,” said Edward Goff, Marketing Director at EE.

“Our new unlimited range offers customers the ultimate smartphone experience in more places across the UK than any other network, all with no speed caps and great swappable benefits like Amazon Prime Video and BT Sport.”

What is worth noting is that the unlimited offer for 5G-SIM only plans is still expensive.

MNO Price
EE £44 a month
Vodafone £30 a month
Three £22 a month
O2 Unknown

Each of the telcos have taken their own approach to data pricing. EE offers 5G SIM-only contracts for £44 a month in the most traditional manner. Vodafone has offered tariffs on speed tiers with the £30 a month tier offering the ‘fastest available speed’, which might vary dependent on where you are. Three is offering 5G connectivity for free for anyone who has an unlimited 4G contract. The £22 a month deal is SIM-only.

O2 is the only one not to release pricing for its 5G data tariffs, being the last to market, though it certainly has taken the opportunity to undermine the promising progress made by rivals.

Although few in the EE offices will be happy to backtrack and have a rethink on the unlimited plans, it does now look to be in a very competitive position. It is the most expensive, but it does have the best network and most consistent, high download speeds. If performance is the measure of success in the consumers eyes, EE is certainly hitting the right notes.

Another factor to consider is the ‘swappables’ element of these deals. For those who sign-up to a 12-month SIM-only deal on 5G for £44 a month, three ‘swappable’ content deals will be included. Each month, customers will be able to elect which bundled content services they desire, ranging from zero-rated video data or music, additional roaming locations, BT Sport or Amazon Prime Video.

The team could probably do with negotiating a few more partnerships as it does look a bit thin on the ground, though it is a reasonable offer.

What we are yet to see from EE is an aggressive push towards the convergence game. Executives have been giving the same presentation at conferences for years, promising a seamless connectivity experience for customers through mobile, broadband and wifi assets, though there doesn’t seem to be much activity on the marketing front to link-up these elements in one conclusive offer.

Either there is something in the pipeline or this is a case of negligence. The combination of EE mobile and BT’s wifi and broadband assets would create a connectivity offering few could dream to compete with. Three and Vodafone are plugging into the convergence game with their own fixed wireless access (FWA) offerings, but EE seems to be lagging here. The opportunity to make noise is there but the team seem to be enjoying the uncomfortable silence.

EE is arguably the market leader in the UK, though thanks to O2’s MVNO relationships it can claim to be the network with the most mobile connections running across it. With the unlimited offer, bundles, biggest and best network coverage and BT’s wifi and broadband assets, EE has an opportunity to nail itself down as the top mobile provider in the UK.

Trying to pick out the winner in the UK’s 5G race is starting to get very difficult.

Nokia gets 5G gig from new-look Vodafone New Zealand

Just days after Vodafone flogged its New Zealand business, Nokia has been unveiled as its 5G network partner.

Even though it has been sold, the company still has permission to keep the Vodafone brand and even has favourable roaming rates on other global Vodafone networks. So to all intents and purposes it’s the same setup, just with the returns ending up in someone else’s pockets.

The decision to go with Nokia for the 5G network was presumably months in the making and represents the continuation of a longstanding partnership, so the involvement of the new ownership was presumably minimal.

“We are excited to be joining forces with Vodafone New Zealand, our partner of over 20 years, to bring 5G to New Zealand,” said Tommi Uitto, Nokia’s President of Mobile Networks. “With this agreement, we will enable Vodafone New Zealand to deliver 5G services to their customers and create an even more connected society.”

“We are excited to be working with Nokia to deliver a commercial 5G network for Vodafone and New Zealand, building on our proud heritage of being first to deliver to Kiwis, the best mobile technology available at the time, including 2G, 3G, 4G and now 5G,” said Tony Baird, Technology Director, Vodafone New Zealand.

Vodafone New Zealand will launch 5G in Auckland, Wellington, Christchurch and Queenstown later this year, which will be the first 5G network in the country. It looks like it’s buying the full monty of 5G stuff from Nokia, including RAN, core and design services, so this will serve as a decent shop window for Nokia.

Vodafone officially walks away from New Zealand

Vodafone has completed the sale of its Kiwi business to a consortium of investors for €2.1 billion.

Although Vodafone is technically leaving the country, the brand will remain. The consortium, featuring Infratil Limited and Brookfield Asset Management, have signed an agreement to continue using the brand, while also accessing favourable roaming rates in countries where Vodafone is maintaining its presence.

“This transaction is a continuation of our strategy to optimise our portfolio and reduce our debt,” said Group CEO Nick Read.

“I am pleased we will continue our 21-year relationship with the business and talented team in New Zealand through a Partner Market agreement, delivering Vodafone’s technology and services to benefit the country as it transitions to a digital society.”

The sale of the Kiwi business was announced back in May as Vodafone searched for ‘financial headroom’. It appears this business unit was deemed surplus to requirements at a business which has been facing financial pressures in recent months.

Although Vodafone has remained profitable in a difficult time for telcos on the whole and maintained semi-favourable positions across the world, there are more difficult times on the horizon due to some lavish spending.

Not only does Vodafone have to source cash to fuel 5G deployments in various different markets, there are a couple of spectrum auctions to keep an eye on and marketing euros which need to be spent combatting resourceful rivals in some countries. The recent acquisition of Liberty Global’s European assets will also place stress on the spreadsheets.

It is been a couple of busy weeks for the Vodafone PR team, as aside from this transaction there have been network sharing announcements in Italy and the UK, as well as the prospect of a tower infrastructure business being spun off. The team is certainly working hard to generate extra cash in any way it possibly can.

Unlimited data is inevitable with 5G, but try telling operators that

We’re quickly moving into the 5G era and many assume the concept of unlimited data bundles will be commonplace, but how will the telcos fare in this new world?

As it stands, the telcos are under pressure. This is not to say they are not profitable, but many shareholders will question whether they are profitable enough. Tight margins and a squeeze on core revenue streams are common enough phrases when describing telco balance sheets, but this could get a lot worse when you factor in unlimited data packages.

As Paolo Pescatore of PP Foresight pointed out, when you offer unlimited data you are effectively killing off any prospect of revenue growth per subscriber in the future. In some markets, there are still fortunes to be made, but in some, such as the UK where 4G subscription penetration is north of 100%, where are you going to make the growth revenues from when consumers are demanding more for less?

More consumers are seeking unlimited or higher data allocations but are not willing to pay for the experience. Some MNOs might be able to resist, but the more rivals who offer such tariffs the more the rest will be forced into line. It’s the race to the bottom which is profitable in the short-term, but growth will end quickly. The price per GB is only heading one direction and unlimited data allocations will end the prospect of upgrading customers.

O2 fighting for air

This is the conundrum which the telcos are facing in the UK right now. All four have announced their 5G intentions and all four are promising big gains when it comes to the next era of connectivity.

Starting with O2, the only one of the four MNOs not to have released 5G pricing to date, this is a telco which looks to be in the most uncomfortable position. Over the last few quarters, the management team has boasted of increased subscriber numbers, but this can only go on for so long in the consumer world. Soon enough, a glass ceiling will be met and then the team will have to search for new revenues elsewhere.

This is of course assuming it plans to go down the route of unlimited data, it might want to stick with the status quo. That said, if everyone else does, it will not be able to fight against the tide for fear of entering the realm of irrelevance.

The issue here is one of differentiation. The idea of attracting new customers by offering ‘bigger, meaner, faster’ data packages will soon end and telcos will have to talk about something else. O2 does have its Priority loyalty programme, but with rivals launching their own version this USP will fade into the noise.

Differentiation and convergence are two words which have been thrown around a lot over the last few years, though O2 has thus far resisted. Last year, CEO Mark Evans suggested he was not bought into the convergence trend and would continue as a mobile-only telco, though this opinion does seem to be softening.

If O2 is going to be competitive in the almost inevitable era of unlimited data, it will have to source growth revenues from somewhere. It is making a push into the enterprise connectivity world, which will bring new profits to the spreadsheets, though does it want its consumer mobile business to stand still?

Bundles of fun

This is where the other telcos in the UK have perhaps got more of a running start in the 5G era. EE has its connectivity assets in broadband and wifi to add value, as well as a content business of some description. Three is already known as the data-intensive brand, while its FWA push will take it into some interesting connectivity bundling options. Vodafone also has FWA, a fibre partnership with CityFibre and is arguably the leader in the enterprise connectivity market. The rivals are offering more than mobile connectivity as a stand-alone product.

Looking at Vodafone to begin with, the recent announcement is certainly an interesting one. The innovative approach to pricing, tiering tariffs on speeds not data allocation, will attract some headlines, while it is also super-charging its own loyalty programme, VeryMe. It has secured content partnerships with the likes of Sky, Amazon, Spotify and gaming company Hatch, while its FWA offering also includes a free Amazon Alexa for those who sign-up early enough.

Combining the FWA product or its fibre broadband service, courtesy of CityFibre, also gives them the ‘connectivity everywhere’ tag, a strength of BTs in recent years, to allow them to communicate and sell to customers in a different way. Perhaps it is missing a content play to complete the convergence bundle, but it is in a strong position to tackle the 5G world and seek additional revenues should the unlimited craze catch.

The same story could be said of Three. With the acquisition of UK Broadband, it has forced itself into the convergence game and kicked off the ‘race to the bottom’ with an unlimited 5G data offer. As long as you have a Three 4G contract, you can get 5G for no additional cost, assuming you have a 5G compatible phone of course.

Three’s strength and weakness lies in its reputation. It is known for being the best telco if you have an insatiable data appetite, this works very well for the 5G era, though it is also known for having a poor network. Three regularly features at the bottom of the network performance rankings, especially outside of the big cities where it has not done nearly enough to satisfy demands.

This will of course change over the next couple of months. Three is working to improve its network with additional sites and a new Nokia 5G core, however it will have to do a lot to shake off the reputation is has acquired over the last few years.

EE is perhaps the most interesting of the four. It has lost its position as the market share leader when it comes to 4G subscriptions, but it does have the reputation for being the best in terms of performance throughout the country. It is regularly the fastest for download speeds, but its 5G pricing is by far the most expensive to be released so far.

That said, with the BT assets it has for wifi and broadband, as well as the content options, there is plenty for the consumer to be interested in. Should BT be forced to readdress the pricing conundrum, it might not have the fear regarding a glass ceiling on revenues as there are plenty of other products to engage the consumer. It will be able to find additional revenues elsewhere.

MVNO no you didn’t

Outside of the MNOs, you might also start to see some competition. MVNOs are nothing more than ‘also rans’ today, but Sky has officially entered the 5G race. This is an interesting competitor, one who could cause chaos to the status quo.

Firstly, understand mobile is not the primary business for Sky. This is an add-on, where it is seeking to drive additional revenues and attract more customers through bundled services. It is the leader in the UK when it comes to premium content and has a thriving broadband unit also. Sky can add services on top of connectivity to make itself seem more attractive than the traditional mobile service providers.

Then again, there are only a couple of MVNOs who can pose this challenge. Sky is one, while there are persistent rumours Amazon wants to get involved with the connectivity game and Google has its own Fi service. These are also companies who are at the mercy of the MNOs in terms of the commercial agreement with the MVNOs, so damage is likely to be limited unless one network owner decides to go down the wholesale infrastructure route.

But you cannot ignore these companies. They are cash-rich, constantly searching for new ways to make money and have incredible relationships with the consumer. They are also the owners of platforms and/or services which are very attractive to the mass market; bundling could be taken into a new context with these firms.

Diversity is our strength

This is of course only looking at the services which are common throughout telco diversification plans today, there are other options. Orange has launched a bank, has experimented in energy services and is making a move towards the smart home in partnership with Deutsche Telekom. Over in Asia, gaming is an important element of many telcos relationships with consumers and this trend is becoming much more prominent in the European markets also.

Elsewhere, the smart home could certainly offer more opportunities for telcos to add-value to an emerging ecosystem, while the autonomous vehicles offers another opportunity and so does IOT. The issue which many of these telcos are facing is competition from the OTTs. Arguably, the battle for control of the smart home might already have been won by the OTTs, though the same could be said for autonomous vehicles and IOT.

In many of the emerging segments, telcos will remain a connectivity partner though they certainly need more than that. This will remain a consistent stream of revenue, though it will also sleepwalk telcos to utilitisation. In IOT, as an example, the major cloud players are crafting business units to engage enterprise businesses for edge and IOT services; this is a market which the telcos would love to capitalise on for both enterprise and consumer services.

Security is another which is increasingly becoming a possibility. The concept of cybersecurity is generating more headlines and consumers are becoming more aware to the dangers of the digital world. Arguably, the telcos are in the strongest position to generate revenue from this segment; there is trust in the brand and they have largely avoided all the scandals which are driving the introduction of new regulation.

Unlimited data is certainly not commonplace today, but with the services of tomorrow promising to gobble up data at an unfathomable pace, it would surprise few to see more people migrating to these tariffs. The question is how you make money once you have migrated everyone.

Diversification and the acquisition of new products is not a simple task, but then again, it is becoming increasingly difficult to imagine how single revenue stream telcos will be able to survive in the world of tomorrow.

 

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Reliance Jio becomes India’s number one mobile operator

Less than three years after launching Reliance Jio has overtaken Vodafone Idea and Bharti Airtel to become India’s biggest MNO by subscriber.

Jio announced it had hit 331 subscribers last week as part of its quarterly numbers announcement but, according to Ovum’s WCIS, that would still have left it just behind the recently combined Vodafone Idea group if the latter had even held onto its existing punters. Jio overtook long time Indian market leader Bharti Airtel in the first quarter of this year.

Vodafone Idea announced its own numbers late last week and they revealed that it continues to haemorrhage subscribers. “Our subscriber base declined to 320.0 million from 334.1 million in Q4FY19 primarily due to customer churn following the introduction of ‘service validity vouchers’ in the prior quarters,” opened the ‘operational highlights’ section of the report.

“We are delivering on our stated strategy although the benefits are not yet visible in our top line,” said Vodafone Idea CEO Balesh Sharma. “We remain focused on expanding our 4G coverage to over a billion Indians as well as expanding our data capacities by adding more sites on TDD and deploying Massive MIMO. We are well on track to deliver our synergy targets by Q1FY21. We expect these factors to increasingly contribute to our financial performance going forward.”

Returning to the WCIS numbers, the total number of mobile subscribers hasn’t increased that much in the three years that Jio has been operating, which means the third of a billion customers it now has have been largely taken from the incumbents. There has been a fair bit of consolidation, so it’s hard to make like-for-like comparisons, but it looks like Jio largely took subscribers from the smaller players initially, but in the past year has been hoovering up tens of millions of subscribers from its two big rivals.

Competition is obviously a good thing but if this trend continues Jio could become dangerously dominant in India and the country’s regulators and politicians may live to regret making it so easy for the country’s richest person to get off to such a flying start. The genie is out of the bottle now, though, and it’s hard to see how Vodafone Idea and Bharti Airtel are going to regain the initiative.

Vodafone Italia and TIM join the network sharing bonanza

Vodafone’s Italian business and Telecom Italia are the latest pair to join the sharing euphoria which seems to be sweeping the Vodafone group.

After network sharing agreements were signed in Spain with Orange and O2 in the UK, Vodafone has swept across to Italy to join forces with market leader, albeit a stressed business currently, Telecom Italia.

“This agreement will enable us to step up the rollout of 5G for the benefit of our customers and the community as a whole,” said Aldo Bisio, CEO of Vodafone Italia. “5G has a key role to play in modernising the country.

“It will provide the technology platform from which to launch innovative new services capable of making business models more efficient and improving productivity throughout the value chain, helping to build a more competitive digital economy. Network sharing reaps the benefits of 5G and at the same time reduces the impact on the environment and lowers rollout costs, allowing more investment in services for customer.”

This announcement actually has two components to it. Firstly, in pursuit of an accelerated 5G deployment plan, Vodafone Italia and TIM will enter into a network sharing partnership which will include active equipment. Secondly, the Vodafone passive tower business will be merged with INWIT, TIM’s own tower business.

Starting with the first component, once again Vodafone has decided to go down the route of sharing active equipment. This was the case when pooling resources in the UK with O2, though it is a slightly unusual approach as the only differentiator now is the spectrum which the duo has acquired individually. However, like the UK the larger cities will be excluded from the network sharing partnership.

Although sharing active equipment has been viewed as relatively unusual in the past, perhaps this is an indication of Vodafone’s position in both of these markets. In the UK, it is sitting firmly in third place in the market share rankings with a lot of ground to make up, while in Italy there are financial pressures thanks to the pricing disruption of Iliad. In both cases, Vodafone will welcome opportunities to free-up cash.

Using this approach, Vodafone suggests it will be able to free-up €800 million over the next 10 years which will certainly be useful for other R&D or reallocating for customer acquisition efforts.

The second aspect of this deal will see the Vodafone Italia tower business merge with TIM’s INWIT, with Vodafone taking a 37.5% and a lump sum of just over €2 billion. What we’re not too sure about is how this will impact the potential spin-off of Vodafone’s tower business in the future.

This was an announcement which got investors excited last week, as Group CEO Nick Read suggested monetizing the tower infrastructure business alongside declining revenues for the latest quarterly statement. This seemed to have forced a positive reaction from the market, though presumably any Italian assets would now have to be excluded from a European-scaled tower infrastructure business.