Bouygues Telecom and SFR enter into network sharing agreement

French operators Bouygues Telecom and SFR have agreed to roll out a shared network covering 57 per cent of the French population. The operators will create a joint venture to manage the shared base station assets and a RAN share covering 2G, 3G and LTE services in the area covered by the network.

The network covers all of France but excludes the country’s 32 largest urban areas that have more than 200,000 inhabitants and blind spots that are currently not covered by either operator. The two said that the agreement will enable them to improve their mobile coverage and generate savings.

Under the terms of the deal, each operator will continue to conduct its network research and development activity separately and will independently set prices and conduct commercial deals. They will also be able to continue offering distinctive services as they will have control over their network backbone and frequencies, the two added.

“This agreement between Bouygues Telecom and SFR to share a part of their mobile networks is along the lines of many other similar arrangements already existing in other European countries,” the two said in a joint statement. “It will take effect upon signature and the shared network is expected to be completed by the end of 2017.”

The deal is expected to hit low-priced challenger operator Free Mobile hardest. According to James Robinson, associate analyst within Ovum’s regulation and policy practice, SFR, Bouygues Telecom and Orange too have all been hit by the entrance of Free Mobile to the market.

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“It has had an impact on revenue and market share and SFR and Bouygues probably thought they could get that back up by charging a premium on 4G services, but that has not gone their way with Free’s announcement that it would offer LTE services with no premium,” he explained.

“However, Free said it was looking to become part of a network sharing agreement with the two operators and wanted to join in on these discussions. Free believes this deal could be a major destabilising factor, which could be true given the relatively little spectrum it has available for 4G and as Orange is reluctant to let it share its own LTE infrastructure.”

French regulator Arcep has said it would work closely with the nation’s Competition Authority to ensure both operators remain independent  in their business strategies and sales and that the agreement “will not squeeze certain competitors out of the market”. The regulator will also ensure the agreement results in better coverage and quality of service to end users before approving the deal.

Network sharing agreements have become increasingly commonplace in recent times. In December last year, Israel’s Cellcom, Pelephone and Golan Telecom announced a 15-year agreement to construct and operate a shared LTE radio network. Czech operators Telefónica Czech Republic and T-Mobile Czech Republic signed an agreement to share their 2G and 3G networks and technologies a month earlier. Vodafone Greece and Wind Hellas signed a similar network sharing agreement covering 2G and 3G technologies in June last year.

However, such agreements are not for everyone and Berit Svendsen, CEO at Telenor Norway told Telecoms.com in March last year that Telenor’s reputation and brand image means is better off not sharing its prized asset.

“More than 60 per cent of consumers in Norway say that Telenor has the best on network coverage and capacity – this is the most important differentiator that we have,” she said. “If we start to share networks with other players we lose that, so this is not in our plans right now. Network sharing is something I think is more common if you’re the number two or number three operator rather than number one.”