O2 and Vodafone enter UK 5G spectrum trade agreement

In an agreement that the leading operators believe will pave the way for faster 5G roll-out throughout the UK and spearhead Britain’s digital leadership, O2 and Vodafone have announced a deal to trade bands to create more efficient blocks of 5G spectrum.

The two telcos already share mast infrastructure, and the new agreement comes on the back of the conclusion of the second assignment stage of the auction of 5G spectrum by UK telecoms regulator Ofcom.

Bidding in the principal stage auction for 200MHz of 5G spectrum ended in March 2021, drawing the relatively modest overall spend of just of £1bn – a figure regarded as good news for maintaining the UK’s 5G development.

In the initial stage, O2 owner Telefónica won 2x10MHz of paired frequency spectrum in the 700MHz band at a cost of £280m, and 40MHz in the 3.6-3.8GHz band at a cost of £168m. Vodafone gained 40MHz in the 3.6-3.8GHz band at a cost of £176.4m.

The assignment stage involved a single bidding round in which interested parties were able to bid for the frequency positions they preferred for the airwaves they have secured in the principal stage.

The assignment stage ended with four operators investing a total of £1.379bn. By the end of this, Telefónica acquired blocks in the 703-713 MHz and 758-768 MHz ranges and 3760-3800 MHz range worth a total of £448m, while Vodafone invested £176.4m to gain spectrum between 3720 and 3760 MHz.

In the assignment stage process, Ofcom added a clause whereby after submitting their assignment stage bids in the 3.6-3.8GHz band, bidders would have the opportunity to negotiate the frequency positions among themselves if they wanted to join together the airwaves they secured with spectrum they already held in the wider 3.4-3.8GHz band.

And it is this clause which O2 and Vodafone are activating to enable improved coverage for customers – both indoor and outdoor – across urban, suburban and rural areas, according to the two companies, which then stressed that large contiguous blocks support faster speeds, lower latency and greener 5G services.

The move will, subject to approval from Ofcom, create a contiguous block of 80MHz for O2, and ensure proximity of Vodafone’s blocks totalling 90MHz of spectrum.

Commenting on the move and what it would mean for users, O2 CEO Mark Evans said: “This year O2 is investing more than ever in its network to improve coverage and experience. Securing contiguous blocks of spectrum is crucial to harnessing the true power of 5G – we will have the strongest indoor and outdoor connectivity and an ultra-reliable frequency.

“O2 is a champion for coverage and reliability, and remains committed to responsibly and securely improving the network experience for all our customers across the UK. This deal with Vodafone is further evidence of our commitment to customers, and we’re hugely excited about the possibilities of our 5G network.”

Vodafone UK CEO Ahmed Essam added: “Over the past year, Vodafone has kept the UK connected. We have invested in our network to deliver brilliant coverage for both calls and data, where and when our customers need it.

“The result of this auction and our agreement with O2 will help us continue our mission of connecting our customers for a better future. It means we have the best possible spectrum to continue giving our customers a fast and reliable 5G service.

“It will also enable us to open up amazing new possibilities for our enterprise customers, putting Britain at the forefront of innovation in vital areas like assisted surgery, remote training, and factory automation.”