Virgin Signs Deal with Rival to use Phone Network

Virgin Media has signed a five year deal with BT to use EE’s phone network in what has been described as a surprise deal.

The Mobile Virtual Network Operator (MVNO) will see Virgin buy wholesale services from EE.

Virgin has been relatively late to the 4G market as it only launched its services in November.  Customers can also roll over unused data.  At the moment it has around 3 million subscribers.

EE has the largest 4G network in Britain.  BT owns a total of 42% of the available spectrum.

Virgin’s deal with EE covers voice and data services and replaces an existing agreement between the two companies.

Windsor Holden, a Juniper Research analyst said, “There was a feeling that Virgin might not have wanted to go in with a competitor. No doubt Virgin had done some cost benefit analysis of the situation. On the minus side BT will know more about Virgin, but on the plus side there will be less bureaucracy in changing providers and clearly thought its network was more attractive.”

While Kester Mann, of CCS Insight, commented, “It is interesting that such close rivals in quadplay entered this wholesale deal.”

Mathew Howett, telecoms analyst at Ovum, said, “Sky’s MVNO deal with O2 meant that was clearly off the table. And Virgin and BT have been aligned from a policy point of view in both not wanting to see a full separation of Openreach.”

Currently, it is arguable that Virgin is the poor relation to Sky and BT in terms of television content.  It does not have access to the programmes of Sky, and it only offers Netflix as a draw.

It has recently launched a 4K box capable of showing TV broadcasted in 4K.  Whether this will rival Sky remains to be seen.

Gerry McQuade, chief exec of BT Wholesale said,  “[We] are very pleased to renew and extend our 17-year-old relationship. As the largest wholesale provider of telecommunications services in Europe, BT values the economy of scale that Virgin Media brings to our network.”