Indian Operators Agree Network Share

UK-based global mobile operator Vodafone has reportedly reached a network sharing agreement with two of its largest rivals in India. According to local press reports, the deal will enable the company to speed up its planned coverage of the subcontinent while saving it a significant amount in costs.

Vodafone and Bharti Airtel, which is the country's largest mobile service provider, will team up with their smaller competitor Idea, to form a joint venture that will pool network resources and may even seek a listing of its own on the Indian stock exchange in the future. The three mobile operators will be sharing about 70,000 mobile mast sites that have been put into the joint venture company, although they will retain separate wireless transmission equipment on these towers.

The new unit, to be called Indus Towers Ltd, will fund its expansion through debt and may sell shares to the public two years later, Akhil Gupta, joint managing director at Bharti Airtel, told local media. Under the terms of the deal, the two main operators, Bharti and Vodafone, will each take a 42% stake in the new venture with Idea taking the remaining 16%. The trio will merge their infrastructure assets in 16 of India's 22 designated telecommunication zones.

By sharing mobile mast sites, and equipment such as generators, the participating companies will reduce their costs by avoiding duplication of capital and operating expenses. In addition, it is estimated that the three companies will have to build a further 50,000 masts across India over the next three years to further boost mobile coverage.

The network sharing agreement should help to placate critics of Vodafone's US$10.9 billion buy-out of Hutchison Essar, India's fourth largest mobile operator, which took place in May of this year.