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22 November 2019

German MNOs announce network sharing deal, Belgium’s is in doubt

As operators in saturated markets come under increasing pressure to reduce the costs of deploying and operating 4G and 5G networks, network sharing is becoming increasingly popular, as several developments of the past week highlight.

In Germany, Deutsche Telekom, Telefónica Deutschland and Vodafone have signed a letter of intent to join forces on building and operating up to 6,000 new cell sites, to ease the burden of improving coverage in rural areas and on major transport routes.

The network sharing deal aims to help the three MNOs comply with the coverage requirements that regulator BNetza imposed on some 5G spectrum licences, which were fiercely opposed by the operators. Germany has a history of insisting that operators build out new networks in rural as well as lucrative urban areas – in the 800 MHz 4G auction, the regulator ruled that licence winners must deploy in rural regions first.

But in the 5G phase, the MNOs claim the conditions have been too burdensome, with

Deutsche Telekom, while announcing the sharing pact, reiterating that all three MNOs continue to believe the coverage mandates, which call for billions of euros of investment, “are excessive and do not comply with applicable legislation”.

Under the agreement, each company will build an equal number of cell sites, which can then be used by the other two MNOs to install their own antennas. The pact is expected to be formalized, and additional details disclosed, in the spring. “The planned collaboration is a milestone for network expansion in Germany”, said Telekom Deutschland’s managing director Dirk Wössner, in a statement.  “Our common goal is to eliminate coverage gaps in the mobile network as soon as possible. Sharing infrastructure is nothing new for us. Sharing it at this scale, however, is a major step in the right direction.”

As a condition of the merger of Telefónica O2 and KPN’s E-Plus, a new entrant was introduced – 1&1 Drillisch was initially an MVNO, but went on to pay €1.07bn ($1.18bn) for 70 MHz of its own spectrum in the recent 3.5 GHz auction. It has also been invited to participate in the infrastructure sharing deal, though it would be expected to take an equal share with the others.

“Today, we are forging an alliance to combat dead spots and increase mobile communications coverage even in areas where it is not profitable”, said Vodafone Deutschland CEO Hannes Ametsreiter in a statement. “In future, hundreds of thousands will benefit from this – people in small rural communities, people on roads, people traveling by train. Together, we operators will construct and share a common infrastructure in dead spots – and of course continue to be rivals in a competitive infrastructure market in the rest of the country.”

Telenet seeks to block Orange/Proximus sharing deal:

Plans for network sharing are going less smoothly in Belgium, where Telenet is threatening to block an arrangement between Proximus and Orange. These two propose to create a 50:50 joint venture to manage shared infrastructure, but Telenet – which was originally involved in the talks too, but pulled out – is asking the competition regulator to block the scheme.

The Competition Authority is expected to decide whether to grant Telenet’s request by the end of this year or early in 2020 – whatever the outcome, it has scuppered its rivals’ aim of completing the deal by year end and starting to work on the shared network in the first quarter of 2020.

“Proximus and Orange Belgium remain fully confident that their contemplated mobile network sharing agreement will bring positive effects to the Belgian mobile communications market,” said Proximus and Orange.