Vodafone Group PLC and Virgin Media O2 have announced a new, long-term network sharing agreement that significantly extends their current agreement for more than a decade. The agreement is subject to the approval of the merger between Vodafone UK and Three UK by the UK's Competition and Markets Authority. If approved, the agreement will provide a stable basis for MergeCo's enlarged network to participate in the network sharing agreement, and Virgin Media O2 will acquire spectrum from the MergeCo.

The agreement and formation of MergeCo aim to transform the experience for tens of millions of customers across the UK and, subject to CMA approval, will rebalance the mobile market by creating a third scaled network operator. It will extend benefits from MergeCo's committed £11 billion network investment plan to customers of Virgin Media O2 and to the mobile virtual network operators (MVNO) with whom they have wholesale partnerships. This will significantly enhance competition in the retail and wholesale mobile markets.

The agreement will bolster quality mobile coverage across the country and deliver improved services for customers. It expands on the existing arrangement between Vodafone UK and Virgin Media O2 and is independent of the Vodafone UK and Three UK merger outcome. However, subject to completion of the merger, Virgin Media O2 will acquire spectrum from the newly created MergeCo, establishing three scaled mobile network operators each with better alignment of spectrum holding.

Through a combination of MergeCo's commitment to invest £11 billion in its network over the next decade and Virgin Media O2's £2 billion annual investment in its networks and services, the agreement will ensure quality mobile connectivity, choice, and competition is enhanced. This will benefit the companies' respective customers, businesses, and MVNOs who make use of networks via wholesale partnerships to deliver their own mobile services to millions of people across the country.

The agreement includes plans for Virgin Media O2 to purchase spectrum at market value from MergeCo, reducing the current imbalances in spectrum holding between the UK's mobile network operators. This will enhance competition in the mobile market, allowing MergeCo and Virgin Media O2 to provide increased capacity, speeds, and greater coverage for their customers.

Ahmed Essam, CEO, European Markets, Vodafone, stated, "With this agreement and our merger with Three, we will transform the mobile experience for over 50 million customers in the UK for the long-term, providing significant network improvements including more choice, better quality, and greater coverage across the country." Lutz Schüler, CEO of Virgin Media O2, added, "This new agreement with Vodafone ensures that quality mobile network choice, performance, coverage, and competition is enhanced to the benefit of millions of consumers, businesses, and our mobile operator partners across the country."

The agreement is subject to regulatory approval and is expected to increase the ability of MergeCo and Virgin Media O2 and virtual operators to compete more effectively, providing customers with more choice, better quality, and greater network coverage in all parts of the country. It will also materially enhance Virgin Media O2's network position through access to more spectrum, reducing the current imbalance in spectrum holdings across the UK market.