European Mobile-Phone Companies Need to Merge Networks, 3 Says

European mobile-phone companies need to share their networks to cut costs and meet increasing demand for high-speed data services, according to Hutchison Whampoa Ltd.'s 3 U.K. unit.

In the U.K., Vodafone Group Plc and Telefonica SA's O2 unit could follow 3 and Deutsche Telekom AG's T-Mobile U.K. division, which since 2007 have a wireless network sharing deal, 3 U.K. Chief Technical Officer Graham Baxter said yesterday in an interview in London. "This will become a case study for other operators," Baxter said. "You have got to have a low-cost infrastructure. If we're operating at a lower cost, then everyone else needs to as well. Ultimately the shareholders are going to be asking why you're more expensive." Phone companies are trying to reduce expenses and bolster sales from high-speed data networks that allow Internet browsing, video conferences and music downloads to make up for a decline in traditional voice revenue.

The U.K., Europe's most crowded telecommunications market, will probably end up with two cellular infrastructures after T- Mobile and France Telecom SA's Orange unit won European Union approval to merge their local units, Baxter said. "The merger has just set the direction."