Belgian mobile providers Proximus and Orange Belgium have signed a deal that paves the way for a mobile access network sharing agreement by the end of the year. The companies expect the term sheet agreement, which will eventually create a joint venture, to increase the quality of the mobile network, provide deeper indoor coverage and allow a faster and more comprehensive deployment of 5G in the country.
Proximus and Orange to remain competitors
Subject to the final agreement, the shared mobile access network will be planned, built and operated by a new 50-50 owned joint venture. Both companies will continue to fully control their own spectrum assets and operate their core networks independently, to ensure a service and customer experience differentiation. The companies will also continue to commercialize their products and services independently and compete at retail, enterprise and wholesale levels.
Cost efficiencies and lower energy consumption
With the network sharing agreement, the companies expect to have 20 percent more mobile sites than with their current stand-alone radio access network. In the end however, antenna site numbers will be lower than if the two hadn’t joined up. This means total energy consumption will, with the deal, be lower by around 20 percent. This is equivalent to the consumption of 10,000 households in Belgium.
Proximus and Orange Belgium will also be saving money, on the outlay of equipment. These cost efficiencies will be used to improve network capacity, in order to meet exponential data growth, to accelerated 5G roll-out and improve service quality.
Specifically, Orange Belgium said it expects the final agreement will deliver cumulative operating and capital expenses savings of EUR 300 million over the coming 10 years. There will also be initial-set-up costs related to de-commissioning and enablements. Orange Belgium expects to spend EUR 130 million over the next three years. Over the coming 10 years, the expected return will in excess of 3 times the operator’s weighted average cost of capital (WACC).
Preparatory work to start in Q1 2020
Over the coming months, the companies will iron out the details, including the organisational model of the new joint venture. The idea is to reach a final network sharing agreement by the end of the year and to start the preparatory work in the first quarter of 2020.
Belgian minister raises concerns about danger of "quasi-monoply"
Belgian Telecom Minister Philippe De Backer said he will be making sure there is enough competition on the Belgian market, the site of Open VLD showed. The minister said that it is good news when operators can succeed in reducing both their costs and the competition but that conditions have to be ensured for consumers Otherwise, investments will go down and prices will go up, he noted. The minister noted that the network sharing agreement could lead to a quasi-monopoly situation, as Proximus and Orange together represent a very large market in the segment. The minister said that a lack of competition has hampered 4G in Belgium and pushed up prices higher than the European average.
