Optus, Vodafone to build 500 joint sites

Mobile carriers Optus and Vodafone Hutchison Australia have joined forces to fill mobile coverage blackspots in metropolitan areas and strengthen their respective networks.

The joint venture will see the carriers share some of their existing mobile towers while also bearing the cost of building 500 new sites over four years in capital cities, Geelong in Victoria and the central coast in New South Wales.

The agreement would ultimately provide Optus with an additional 1000 sites, for a total of approximately 5000 free-standing and standalone mobile sites. Vodafone, on the other hand, would get access to around 900 sites from the venture.

It comes as the extension of a 2004 agreement that initially saw the carriers share 3G infrastructure.

Bill Morrow, the newly appointed chief executive of VHA, told iTnews a joint governance board would be appointed to determine the location of the new sites where it was deemed suitable for both carriers.

But he denied the move was aimed at competing with Telstra's existing mobile reach.

"I wouldn't look at it as a 'beat [Telstra]' and I'm telling my executives that. Telstra is not our focus, it's the customer," he said.

However, it is believed the joint venture was aimed at also narrowing the gap in coverage between Optus and Telstra mobile networks.

"We see the rise of smartphones, many more people wanting data and data indoors is obviously a key performance threshold for us, looking for any coverage holes we have in the network is where we'll start focusing those 500 sites," Optus mobile network director Andrew Smith said.

Though the venture is focused on metro areas for the time being, Morrow said the venture could provide for greater regional access in future.

"In the five major cities of the country, it's important everyone have their own network and where it makes sense we'll do some tower sharing to address those local communities," he said.

"Outside of that, there's a slightly different environment where we see, very much the same way with Optus, where we have to minimise the cost in those areas. While Telstra has spent a lot of money in the past out there, to do that three times affects the economic profit pool and that's why you have to come up with a different solution."

Analysts from Ovum and Telsyte said the primary motivator for the agreement came in saving the capital cost of building mobile sites while accelerating network rollouts for both carriers.

"In expanding mobile networks the most costly part is site acquisition and readiness; three to five times the cost of the equipment deployed on the sites," Telsyte telco analyst Chris Coughlan told iTnews.

"This expanded JV essentially halves the cost of this activity. For sites that are existing will shorten the time to establish equipment on sites."

Optus said it would be able to accelerate its planned LTE rollouts by 12 to 18 months, particularly in capital cities.

Vodafone, which has traditionally been hesitant to unveil a solid LTE roadmap, would not share details on potential changes to its plans.

However, Morrow - who led the 4G rollout at US carrier Clearwire - said he had a "strong view" on the plans and would look to more comprehensively fill those out in the near future.

Vodafone builds roaming network

The venture, the cost of which neither company has disclosed, is expected to provide the greatest benefits to Vodafone.

Under the deal, the third largest carrier would also gain roaming access to Optus' network for the first time from April next year, providing 96 percent population coverage.

The company currently claims to cover 94 percent of the population with 3G coverage. Former VHA chief Nigel Dews told investors in February that the company had focused on providing its fastest speeds to 87 percent of the population while offering "usable, good coverage" up to 96 percent coverage.

3 Mobile customers have roamed onto Telstra on a national scale while Vodafone has offered a similar capability for 2G coverage in regional Victoria and Tasmania.

It is the first time Vodafone customers will roam onto another Australian 3G mobile network outside its own infrastructure.

Optus Networks managing director Günther Ottendorfer told iTnews the roaming agreement would not add to any congestion on the network.

"It's about using an infrastructure that is already there more efficiently," he said.

The agreement comes as VHA looks to end its existing relationship with Telstra under the eight-year-old 3GIS contract, which saw 3 Mobile share its 3G network with Telstra while allowing customers to roam onto the largest carrier.

Vodafone has also gained access to another 900 sites from the end of the 3GIS agreement, which is due to end in August this year.

The carrier, which continues to struggle financially after network woes stretching back to late 2010, is more than two-thirds the way through a network upgrade and replacement program that would amount to $1 billion investment since its merger with 3 Mobile.

Morrow said no discussions were held with Telstra to re-negotiate or begin a new venture.

The venture is subject to approval by the competition watchdog. A spokesman for the government organisation could not be contacted at time of writing.

Updated 1.30pm: Clarified Vodafone's roaming capabilities.

Updated 4.30pm: Added further comments from Optus.