Proximus and Orange merge networks to prepare for ‘5G war’
Belgian state-owned telecom operator, Proximus, and French Orange are merging their existing mobile networks in Belgium to prepare for the biggest challenge of the near future, 5G. This technology, ten times faster than current 4G, will be crucial for the ‘internet of things’ (IoT) connecting all kinds of appliances and for the autonomous car in particular.
The news broke on Thursday in the late afternoon at a special joint committee with the Proximus unions. Both companies will transfer their network infrastructure into a new entity that is owned on a 50/50% base. From Proximus, 82 people will make the switch, at Orange some 40 to 50.
20% better coverage
For the user, a 20% better coverage of the whole Belgian territory is promised, both outdoors and indoors. Both companies will maintain their proper radio frequencies and continue selling their mobile services separately as competitors.
The joint-venture will manage mobile phone masts, base stations, transmission costs, maintenance, and repairs. This way Proximus hopes to save 35 to 40 million euros per year, Orange counts on 30 million from 2024 on.
Huawei network equipment
These savings will come from lower renting costs to place the masts, lower energy use – comparable with the consumption of 10.000 Belgian households and lower maintenance costs. But most important is gaining more ‘strike power’ in investing in the new 5G technology.
The move to a shared network will require an additional investment first of some 140 million euros, spread over the period 2021-2023. But a multiple of that amount of money will be needed for deploying a nationwide 5G network. The fact that both telecom operators are using the same Chinese Huawei network technology makes integrating easier.
A real bombshell
This kind of cooperation between competitors is emerging everywhere in the world with 5G’s rise at the horizon. The French Orange mother-group has already joint forces with British Vodafone in Spain and Romania. Vodafone is working in the UK with Spanish Telefonica… And in Japan, KDDI and Softbank just signed a partnership.
For the third major telecom operator in Belgium and fierce competitor, Telenet, the news must have come as a real bombshell. For them joining the network with one of the others would be technically far more complex, as Telenet is using other Chinese technology, from ZTE.
Not applauded everywhere
At the Telenet headquarters in Mechelen, they react rather cold though, saying they have full confidence in their network in which the company invested more than 250 million euros in the last three years since it took over another operator, Base, in 2016.
The merger of the mobile networks of Proximus and Orange wasn’t applauded everywhere. Least off all at the unions of Proximus itself, who fear that CEO Dominique Leroy is ‘privatizing’ another part of the company in her restructuring plans, after the group’s call centers.
Another ‘cool lover’ is resigning liberal Minister of Telecom, Philippe De Backer (Open-VLD), who fears that Proximus and Orange will get something that looks like a monopoly this way.
“This stage is essential for deployment of 5G in our country,” De Backer says. “The rollout of 5G will have its impact first on the sector of enterprises and industrial applications, a market that is dominated by both parties already.”
“If you add the large enterprises that will be the first clients for 5G, this gives them a quasi-monopoly. And by lack of competition, the general rollout could be slowed down and be very expensive…”