BT and Deutsche Telekom in UMTS deal

BT has signed a deal with Deutsche Telekom to share the cost of building out UMTS networks in the UK and Germany, despite fears that competition would be hit.

The two companies have incurred huge debts acquiring licences to run 3G services, and the turbulent climate for telecoms has convinced operators that sharing infrastructure is the best option.

An Oftel spokeswoman said that sharing infrastructure was not expressly prohibited in licence conditions, and that mast-sharing initiatives would be supported where consumer benefits outweigh any potential disadvantages.

"We will wait for more details from BT and Deutsche Telekom before we say any more," she said.

The memorandum of understanding means that the two operators will share building costs in the UK and Germany through their subsidiaries: BT's Viag Interkom in Germany, and Deutsche Telekom's One2One in the UK.

A BT spokesman said the plan, which will attract great interest from rival operators, would save the struggling telco about £1.22bn in capital expenditure over the next 10 years.

The move followed the decision by German regulator, RegTP, to allow rivals in Germany to share infrastructure.

The watchdog said it had reinterpreted existing licence conditions, and the decision was seen as particularly favourable to the four smaller licence holders.

Sharing has also been touted as a method of obtaining planning permission for the new antennae masts and base stations that UMTS networks will require.