A partnership between fierce rivals O2 and Vodafone was never going to be easy.
However, the two operators have defied criticism that such a pairing might not work after setting up their joint venture company Cornerstone, which is still going strong a year and a half later.
O2 and Vodafone entered the deal to share network infrastructure in March last year, in an attempt to save ‘hundreds of millions of pounds’ over the next decade.
But in July doubts were cast over Cornerstone’s future when it emerged that Rob Crutchley, head of the O2 and Vodafone network share company Cornerstone, was leaving amid claims of discontent from O2.
The news followed claims that Vodafone had not been meeting the targets set by O2, with some reports suggesting that the two had fallen out.
O2 fiercely denied the claims at the time – and its CTO Derek McManus continues to dismiss reports of a rift between the operators. He says: ‘There has been some negative press, but we are very happy with the progress that Cornerstone is making. We are at the level where it is in the right place.’
McManus adds that, far from being unhappy, Cornerstone has actually stepped up its target. He says: ‘This market is getting more and more ambitious as data grows.’
Meanwhile, Vodafone CTO Jeni Mundy, who runs joint venture Cornerstone alongside McManus, says: ‘The momentum that Cornerstone now has is really very strong. The customer demand that we have is also strong.’
Last October, Mobile revealed that Cornerstone was fully operational with over 100 sites live or under construction.
Meanwhile, in April, the two companies even claimed that Cornerstone was ‘over delivering’, with 300 more shared sites live since October 2009.
McManus and Mundy refuse to disclose Cornerstone’s latest figures, but McManus says: ‘I’d rather not reveal anything – we are really happy with the numbers.’
Cornerstone’s sharing deal is not yet about merging the two networks, like rivals Three and T-Mobile, but O2 had said previously that it is looking at extending its deal with Vodafone.
Mundy confirms the company is looking at the possibility of expanding the network share. She says: ‘When we first went in, we went into sharing radio network sites. That is the same now but we are looking at the possibility to expand. But this won’t happen at the moment.’
And Cornerstone will be stepping up its efforts under newly appointed boss Kevin Millroy. Millroy is a dab hand at network sharing, having already managed a deal in his previous role at Ericsson.
McManus says: ‘The appointment of Kevin is a sign of commitment and this is a sign that we are moving forward. Kevin has the perfect CV.’
Mundy adds: ‘As with anyone who takes a new job, he will come in and look at the team and targets, so he will come to us after looking at any areas that may need expanding.’
But Mundy is not anticipating a restructure under Millroy. She says: ‘I’m not expecting that. Kevin will know how to get the Cornerstone team how it should be.’
McManus adds: ‘Kevin’s instructions are to assist plans and changes and to help add more capability.
The other thing that has happened in the last 18 months is relationships
have got stronger. The strength of the relationship between the two companies has got better and we are always looking to reach more opportunities.’
And the rivalry some would expect is certainly not there. Cornerstone is located between Vodafone and O2’s HQ as the two operators ‘wanted it to be 50/50’, says Mundy.
McManus adds: ‘It’s also based around the country so people are in Scotland building the network as well as in the South.’
Cornerstone has also expanded its team ‘due to an increase in demand’, says Mundy, adding: ‘We have supplemented as we have grown. As we ramp up we need to ramp up each phase.’
Cornerstone works with partners, says McManus, and ‘has taken on those partners as a company’. He adds: ‘The whole thing is working well.’
McManus credits Susan Copeman, an O2 chief who ran Cornerstone in the interim, with keeping things going following Crutchley’s surprise departure.
He adds: ‘I think the way in which the team has settled is amazing. Vodafone has gone from an arch competitior to a partner.
What you see is a very strong Cornerstone culture with bonding in those teams.’
Mundy adds: ‘Derek and I and the management team were conscious of the fact we were two different operators. We ‘buddied’ people up in the first place and this has paid off. We were really pleased to see how the team got on.’
But a pressure that’s falling on all the networks is data. As a growing number of consumers buy 3G enabled smartphones, every network is feeling the strain. So much so that O2 announced a £100m extra network spend in London this year.
McManus says: ‘With data, I wouldn’t say it’s [demand] getting worse and worse,
but it is getting more and more. Part of the relationship with Cornerstone is dealing with that.’
Vodafone and O2 might do well to leverage their relationship to really deepen capacity, before the strain gets greater.