Vodafone and Orange to share mobile mast sites

LONDON (Reuters) - Mobile phone group Vodafone (VOD.L) and rival Orange, owned by France Telecom (FTE.PA), are to share mobile mast sites in a deal designed to cut costs and improve coverage across Britain.

The two groups revealed plans to work more closely on their networks just over a year ago and on Tuesday gave an update on the deal.

The first stage will involve Orange UK and Vodafone UK sharing existing mast sites for their older 2G network and the 3G network, with one site housing the equipment of both companies where previously two would have been used.

"Vodafone and Orange will also benefit from the associated operational and financial cost efficiencies of having fewer mast sites, enabling them to deliver even more investment in innovative products and services for customers," Vodafone said.

Vodafone, the world's largest mobile phone company by revenue, said the initiative could lead to a 15 percent reduction in the number of mast sites in the first two years -- or 3,000 sites in total.

The two companies will continue to maintain separate networks, will retain full responsibility for the quality of service they offer, and will remain competitors in the UK mobile markets.

"It will be better for our customers, better for our businesses and better for the environment," Orange UK Chief Executive Tom Alexander said in a statement.

Orange had over 16.8 million customers in the UK at the end of 2007, while Vodafone UK has 17.93 million customers.

T-Mobile UK and 3 UK announced a deal to combine their 3G access networks in December.

(Reporting by Miyoung Kim; Editing by Kate Holton and David Holmes)