O2 Ireland wants to share the cost of constructing a third-generation (3G) mobile phone network in the Republic with another operator in a bid to save about €320 million.
The State's second mobile company said yesterday it would like to sign a similar infrastructure-sharing deal to the one its parent, mmO2, has agreed with T-Mobile. This deal will enable the firms to pool base stations, antennae and network parts in Germany and Britain, leading to cost savings of up to $5 billion (€5.1 billion).
Third-generation mobile technology enables companies to offer a range of multimedia and video services at high speeds to mobile phones and hand-held devices.
Initially viewed as a licence to print money, mobile firms spent about €130 billion acquiring licences in Europe. However, following the technology downturn and technical hitches, many firms are scaling back their investments.
O2 Ireland released a statement yesterday following media reports that the European Commission would shortly approve mmO2 and T-mobile's proposed infrastructure deal.
Mr John Gunnigan, director of regulatory affairs at O2, said the principles within which infrastructure sharing could happen in the Republic were specifically provided for within the telecom regulator's licensing process here.
"We believe that this framework provides a sound basis for any such arrangements between Irish third-generation operators," he said. "At this stage, the full line-up of operators in Ireland still hasn't been finalised but we are watching developments closely."
O2 will seek a deal with one of the other 3G licensees, Hutchison Whampoa or Vodafone. This would enable the firms to share network infrastructure in rural areas while competing in infrastructure in cities with high population densities.
Under the terms of 3G mobile competition in the Republic, each licensee can share up to 75 per cent of network infrastructure, according to Mr Darragh Stokes, managing partner at Hardiman Telecommunications.
He said this would cut the cost of rolling out a 3G mobile network by €317 million. The cost of rolling out a full Irish network would be €953 million, according to Mr Stokes.
The expected approval of this type of infrastructure-sharing deal by the Commission would throw a lifeline to cash-strapped mobile phone operators across Europe.
Several firms have recently written off the value of their 3G assets due to the huge cost of rolling out networks and growing doubts that consumers will pay for the new technology.
Even in the Republic, which is selling its licences at a fraction of the cost of other European countries, there has been only lacklustre interest in the technology.
Just three firms applied for the four mobile licences on offer in the Republic, and the State's biggest mobile firm, Vodafone, has yet to decide whether to proceed with a 3G strategy here.
The firm is expected to decide by September 12th on whether to accept a licence in the Republic.
Experts estimate the cost of constructing 3G mobile phone networks in Europe at more than €100 billion. Most mobile firms are believed to be studying the possibility of teaming up with other operators to share costs.
Meanwhile, Hutchison Whampoa, which recently accepted a 3G mobile licence in the Republic and is set to introduce a service in Europe shortly, has made an offer to buy a licence in Finland to fill a hole in its Nordic region ambitions.
Hutchison, the most bullish investor in 3G technology, said it was bidding for the licence and operations of Swedish operator Telia in Finland because of the latter's restructuring. It did not provide any details and Telia declined to comment.
