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Vodafone Group (NASDAQ:VOD) Signs Network Sharing Agreement With Telecom Italia, Contemplates Business Combination

Vodafone Group (NASDAQ:VOD) lost 1.15% in the last trading session to close at $17.99 at the heel of the announcement that their Italian subsidiary had signed a 5G network sharing partnership deal with Telecom Italia.

Network sharing agreement

Vodafone and Telecom Italia indicated that they had signed an MoU that outlines the non-binding terms of their partnership for the Active Sharing Project. The sharing partnership includes sharing of 5G as well as active sharing of 4G to enable them to expand their existing passive agreement to enhance deployment of 5G to other regions at a lower cost.

The Active Sharing Project enables the companies to agree to roll out 5G infrastructure jointly. The project will allow the companies to deploy the 5G infrastructure across the country especially in larger cities faster and at a lower cost. Vodafone and Telecom Italia will both evaluate the commercial and technical feasibility of joint deployment of active 5G equipment in the region where each company may wish to retain strategic convenience. This will ensure that they meet the needs of their respective customers efficiently.

For the existing 4G network the companies are also considering having active network sharing to enable them to support the active sharing of the 5G network which will further improve efficiencies. The parties are equally considering an upgrade to their mobile transmission networks through the addition of high capacity optical fiber cables. The upgrades aim at enabling customers to enjoy the new 5G features such as low Latency and faster speeds conveniently as well as improve the economies of scale of the companies.

Parties considering a joint venture

Since the companies are considering potential business combinations, they have planned to consolidate their passive towers in Italy into a single entity. It will include the combination of infrastructure in Inwit SPA and that of Vodafone’s passive tower. With time the companies will move the active equipment from 3rd party towers to the new company‚Äôs infrastructure where possible. The initiatives set out in the agreement signed are expected to be complete by the end of the year.

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