BT slumps as Virgin Media switches mobile network to Vodafone

  • BT slumps as Virgin Media switches mobile network to Vodafone

BT slumps as Virgin Media switches mobile network to Vodafone

Virgin Media has agreed a five year deal with Vodafone UK to bring new services, including 5G, to more than three million mobile customers and provide further flexibility to grow its mobile operation.

Virgin Media is owned by United States telecoms giant Liberty Global, which is also rumoured to be in talks with Sky to invest in a full-fibre network.

Virgin Mobile 5G services are set to launch on the Vodafone network before the transition takes place.

The contract is reportedly worth about £200m to BT, whose shares fell 4.5%. Vodafone was up 0.7% at 163.16p.

Jerry Dellis, a telecoms analyst at the investment bank Jefferies, said Vodafone was likely to have offered much cheaper pricing than BT's EE was willing to concede.

"That represents a material strategic shift for Vodafone, which previously stressed the importance of not allowing MVNOs to undermine retail pricing levels", he said.

Vodafone had largely shunned major MVNO in its home market, unlike rivals such as BT's EE and Telefonica's O2, which provides the network for Tesco Mobile and Sky Mobile. The contract between the firms will start from 2021 and run until 2026, and for the duration Vodafone will "supply wholesale mobile network services, including both voice and data to Virgin Mobile and Virgin Media Business".

Virgin Media chief executive Lutz Schuler said: "This agreement with Vodafone will bring a host of fantastic benefits and experiences to our customers, including 5G services in the near future".

Vodafone chief executive Nick Jeffery said: "We are delighted that Virgin has recognised the huge investments we've made, and continue to make, in building the UK's best mobile network and our role in challenging the market with new commercial services".

The group is trying to squeeze more profit from its network, for example by creating more tower sharing deals. Virgin's parent company Liberty Global and Vodafone have discussed "asset swaps" in the past, discussions which led to a joint-venture in the Netherlands, while Vodafone has since purchased Liberty's central European cable assets.

BT said Virgin remained a highly valued customer.

An extension to the agreement with BT Enterprise was reached in 2017 and allowed Virgin Media to operate a "deep MVNO" in which it controlled billing, SIM cards and other network components.