T-Mobile and 3 UK cosy up

UK mobile operators 3 UK and T-Mobile are hammering out the details of a 3G network sharing agreement that could see the two operators merge their radio access networks (RAN).

Ovum analysts Elsa Lion and Matthew Howett revealed that there is no agreement in place as yet and there is no guarantee that the deal will go ahead.

But if it does go ahead, it would be the second such agreement in the UK this year. In February, Vodafone and Orange announced that they had agreed to share their 3G RAN, potentially extending the agreement to 2G as well.

Under a network sharing agreement, both companies continue to operate independently, managing traffic separately and competing as normal. The driver in usual circumstances is the opportunity to cut capex but in the case of T-Mobile and 3, Ovum believes a deal would have further interesting consequences.

T-mobile would benefit from the extended 3G coverage that 3 can provide, allowing T-Mobile to comfortably meet its 3G licence obligation for coverage. Both operators have also rolled-out HSDPA and would be able to extend HSDPA coverage in a more effective way, by avoiding the duplication of sites. The reduced ‘environmental cost’ from deploying fewer sites is likely to be popular, Ovum said.

There are on going discussions concerning the deployment of 3G networks within the 900 and 1800MHz bands in Europe. So it may be that 3 is interested in T-Mobile’s GSM spectrum as a way to reduce the cost of running its network. It is expected that the GSM900MHz and GSM1800MHz bands are to be approved for refarming for 3G use in late 2007.

More speculatively, Ovum notes that the deal could pave the way for an acquisition of 3 by T-Mobile. Although a network sharing deal could in fact increase 3’s price tag, it would also enable T-Mobile to evaluate 3 as a business before buying.

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