Vodafone, Orange to Share Network - Analyst Blog

By
A A A

European telecom giants Vodafone Group Plc. ( VOD ) and Orange ( ORAN ) have agreed to share network infrastructure in Romania. The tie-up is a manifestation of the network sharing trend among European operators to curtail capital investments.

Vodafone Romania and Orange Romania will jointly invest in 4G rollout, targeting speedier expansion at a lesser cost. The deal will allow the two operators to extend their reach in rural Romania thus providing an opportunity to tap the under penetrated regions of the European nation.

Both the companies will continue to compete against each other and the other four operators in the Romanian market, where Orange holds the top spot, followed by Vodafone. Additionally, both the companies will independently operate their spectrum and will have different core networks, which will differentiate their competitiveness.


The partnership, however, entails Vodafone or Orange to share each other's backhaul infrastructure thus eliminating network duplication. Details about the financial synergies from the deal were however not divulged by either company. Notably, this is the second deal between the two telecom behemoths in Romania, where they already share cell sites.    

Telecom operators, in particular the Europeans, are entering into infrastructure sharing partnerships to reduce their capital burden on building their own LTE networks. According to rating firm Moody's, European telecom operators are mulling over alternatives to enhance network capacity and improve their enormous debt burden.

Unprecedented adaptation of smartphones and other wireless devices has led to a huge surge in data demand, and Europe is no exception. This is exerting tremendous pressure on the networks of the European operators. We see the latest tie-up as mutually beneficial, allowing both Vodafone and Orange to deploy their LTE networks faster and reduce network pressure.

Both Vodafone and Orange currently carry a Zacks Rank #3 (Hold). Other companies within the sector that are worth considering are Turkcell ( TKC ) and China Unicom ( CHU ). Both the stocks currently carry a Zacks Rank #1 (Strong Buy).



CHINA UNICOM (CHU): Free Stock Analysis Report

FRANCE TELE-ADR (ORAN): Free Stock Analysis Report

TURKCELL IL-ADR (TKC): Free Stock Analysis Report

VODAFONE GP PLC (VOD): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CHU , ORAN , TKC , VOD

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

33,974,386
  • $17.98 ▲ 0.28%
20,763,901
  • $91.29 ▲ 2.06%
19,110,793
  • $7.26 ▼ 1.22%
18,528,869
    $8.33 unch
18,014,920
  • $4.19 ▼ 1.18%
16,448,919
  • $25.83 ▼ 0.19%
14,748,190
  • $7.60 ▼ 1.43%
14,144,383
  • $112.01 ▼ 0.47%
As of 12/24/2014, 02:12 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com