Deal of the week – One 2 One

A&O and Kemp Little handle UK's first 3G cost-sharing

BT Cellnet keeps work in-house as One 2 One opts for dual counsel

City technology specialists Kemp Little and Allen & Overy (A&O) have steered through the UK side of a landmark third-generation (3G) cost-sharing agreement between T-mobile, One 2 One's parent company, and BT Cellnet.
Kemp Little and A&O were instructed by One 2 One general counsel Julia Chain.
BT Cellnet handled the legal and regulatory work in-house, with a team led by company secretary Mark Burgess, assisted by John Matthews. BT Cellnet will be operated by mm02 following the demerger from BT.
The One 2 One-BT Cellnet agreement is the UK's first 3G cost-sharing deal, and is something of a coup for the firms involved. Telecoms analysts see such deals as a possible way of saving 3G, and other mobile companies are no doubt keen to follow suit.
Successful bidders for 3G licences have laboured under the huge costs paid at auction to develop the new technology. This was exacerbated by the dotcom downturn, which hit public interest in 3G. Consequently, mobile phone companies across the EU have been scrabbling around for some time to find ways to share 3G networks without breaking competition rules.
T-mobile has already made a corresponding deal in Germany, where it will share costs on network rollout and allow roaming arrangements with mmO2's German mobile subsidiary Viag Interkom. The exact value of the deal is unclear, but it is expected to save 30 per cent of the 3G network build capital expenditure over a 10-year period.
On the UK deal, the Kemp Little team was led by founding partner Richard Kemp, who was previously part of Chain's team at Garretts. Kemp said that the firm advised One 2 One's small in-house team on the full range of commercial and contractual legal aspects of the deal. The relationship is likely to continue.
The significant competition aspects of the agreement were handled by A&O. Competition partner Chris Watson led the team comprising Mark Mladek, Simon Taylor and Emanuela Lecchi. Watson joined A&O two years ago from Simmons & Simmons, where he regularly worked with One 2 One. The mobile operator switched back to Watson for the 3G deal. Following its successful conclusion, A&O looks certain to retain the company's competition work.
Both the UK Government and European Commissioner for Competition Mario Monti have made comments warning mobile companies not to enter into network-sharing deals at the expense of competition. As a result, operators looking to recoup 3G licence costs have been in something of a regulatory straightjacket. But Watson said he is confident that the lawyers have “structured the deal so that it fits with the existing regulatory environment”, both at the national and EU levels.