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O2 says hopes to reach deal on UK spectrum

Mobile operator O2 is hoping to reach a deal with Britain's telecoms regulator over giving up some of its spectrum for use by competitors, the firm's UK head said.

Ofcom is proposing that O2, owned by Spain's Telefonica and its rival Vodafone, give up about 10 MHz of spectrum which could be auctioned to rivals.

“The government has asked all the operators in the UK to sit together and, assisted by the government, to come to an industry solution,” Ronan Dunne, O2 UK Chief Executive, told Reuters at the Mobile World Congress in Barcelona.

Taking spectrum away from Vodafone and O2, leaders in the British mobile market, is designed to boost competition and could cost the operators Ł90 million ($128.4 million) and Ł60 million respectively in spectrum loss, excluding losses from extra competition.

“That's broadly correct (the estimate of losses), what is less clear is what are the benefits,” Dunne said.

The sector could come up with an acceptable solution for the government involving a more efficient use of the spectrum in terms of cost, he said.

Operators have about two months to propose something which is acceptable to Ofcom, Dunne said.

Ofcom hopes to auction the spectrum freed up in the summer of 2010 to competitors including T-Mobile and France Telecom's Orange.

On Friday, Ofcom said: “This would create fresh opportunities for the launch of new services, including improved mobile broadband services, and allow for effective competition as these services are rolled out.” (Reuters)