Two European telecom powers, Vodafone Group (NYSE:VOD, news, filings) and Telefonica (NYSE:TEF, news, filings), announced today that they will share mobile network infrastructure in four countries: Spain, Germany, Ireland, and the UK. They will be sharing sites, masts, and power supplies, while each will use its own radios and vendors. They will therefore be able to more quickly meet the needs of European consumers, who may be buying less phones due to the recession but are nevertheless sending more bits back and forth every day with the ones they do buy.
Of course, the reason behind such a deal is obvious to all. We're in a recession, and every large telecom on the planet is cutting both capex and opex wherever possible. This deal will let both Telefonica and Vodafone save a bundle going forward. How much? They say 'hundreds of millions of pounds' in savings each over the next decade, guidance so helpful that it covers an entire order of magnitude. And of course, there's that 'over the next decade' bit, an overused way to make numbers look bigger - so let's call it 'tens of millions of pounds per year' each. That's real money of course, but we should remember that both Vodafone and Telefonica have annual revenues a thousand times greater than these savings. Just to keep things in perspective.
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