O2 and Vodafone Merger Approved

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O2 and Vodafone merger confirmed

October 2012

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Vodafone and O2 have won approval from Ofcom to launch a new core grid that combines the existing network infrastructure of both firms. 

The two companies can now push ahead with their plans to share 18,500 mobile phone masts on one core grid which will allow them eventually to take on EE (formally Everything Everywhere) in the 4G LTE market.
 
Chris Hicks, head of telecoms at Fisher German, provides advice to landlords with phone masts. He confirms that Vodafone and O2 will most likely to set up a joint venture company which the assets of each operator (i.e. mobile phone masts) will be placed.  The joint venture company will then own and manage the masts and be responsible for payment of rent whilst Vodafone and/or O2 will operate their own networks from one core grid. 
 
Chris advises that landlords should be wary of applications to assign leases into the name of the joint venture company as it is likely Vodafone and O2 will seek to do this free of charge.  Chris comments “A lot of Vodafone and O2 leases we advise on have no rights to assign to third parties i.e. a joint venture company. Due to this, it is reasonable to request a one off premium and/or additional rental payments together with a modernisation of the lease terms.”    
 
Landlords who have both Vodafone and O2 masts on their land or property are especially at risk, as one mast will be retained whilst the other decommissioned.  Landlords in such circumstances should be cautious of applications to assign leases into the names of the joint venture company and notices received to terminate them. In the latter scenario, quite often no break rights exist and therefore hefty surrender premiums can be negotiated.
 
While the merger lays the foundation for each operators own 4G network, improvements to existing technology through the upgrading of mobile phone masts and provision of new masts is widely expected. Indoor 2G and 3G coverage is promised to 98% of the UK population by 2015.  This will provide landlords with opportunities to develop value from both new and existing leases.
 
For advice on any of these matters please contact Chris Hicks of Fisher German on 01858 411202 or email chris.hicks@fishergerman.co.uk
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