LC-2023-000734 - [2025] UKUT 00058 (LC)

On 17^th October 2012 Vodafone Mobile Network Limited, Vodafone and Cornerstone Telecommunications Infrastructure Limited (“CTIL”) entered into an agreement which was described as a contribution agreement. This contribution agreement (“the 2012 Contribution Agreement”) came about as the product of a collaboration between Vodafone and Telefonica UK Limited (“Telefonica”) which was known as Project Beacon. This collaboration involved network and site sharing arrangements. In very broad terms, as we understand the position, Vodafone assumed the responsibility for providing a network for the shared use of Vodafone and Telefonica in the west of the country, while Telefonica assumed the responsibility for providing a network for the shared use of Vodafone and Telefonica in the east of the country. The Vodafone Site, being located in the eastern part of the country, fell and falls within Telefonica’s area of responsibility. In the evidence and the documents at the Trial, Telefonica was frequently referred to as VMO2 (Virgin Media O2). We understand VMO2 to be the trading name used in the joint venture between Telefonica and Virgin Media, to which we have referred above. We will continue to refer to Telefonica, as the party with responsibility for the Vodafone Site pursuant to the collaboration (Project Beacon) between Telefonica and Vodafone.

As part of Project Beacon, Vodafone and Telefonica agreed to transfer mobile communications sites and network assets to a joint venture company, described as “JVCo” in the 2012 Contribution Agreement. This joint venture company, established in 2012, was CTIL.

Pursuant to this collaboration Vodafone entered into the 2012 Contribution Agreement with CTIL. The 2012 Contribution Agreement was amended and restated in 2017, 2019 and 2021. It was common ground between the parties that it was only necessary, for the purposes of the preliminary issues, to consider the 2012 Contribution Agreement and the Contribution Agreement as amended and restated in 2021 (“the 2021 Contribution Agreement”).

The meaning and effect of the 2012 Contribution Agreement and the 2021 Contribution Agreement (“the Contribution Agreements”), in terms of the relationship thereby created between Vodafone and CTIL, were substantially in dispute between the parties. We will need to return to the Contribution Agreements in detail later in this decision. For present purposes it is sufficient to make reference to Recitals (R) and (S) to the 2012 Contribution Agreement, which stated the intentions of the parties in the following terms:

“The single grid sites and the Passive sharing element

(R)

It is intended that the telecoms site management business of each of the operators (including the single grid of sites and the passive radio access network assets on such sites) shall be transferred to and carried on by JVCo, which shall acquire real estate interests in the single grid of sites over a period of time and in a structured manner so as to achieve the single grid as efficiently and quickly as possible.

(S)

It is intended that JVCo shall, once it is operationally ready to do so, as agent of Telefónica and Vodafone, take over the management of all of the sites belonging to Telefónica and Vodafone, pending the transfer of the sites selected for the single grid to JVCo and take decisions to decommission sites that are no longer required. Each of Telefónica and Vodafone shall appoint JVCo as its agent and grant JVCo the rights it needs to undertake such management activities under its contribution agreement.”

It is common ground between the parties that the Contribution Agreements applied to the Vodafone Site.

Recital (T) to the 2012 Contribution Agreement provided that Telefonica and Vodafone should each source, exclusively from CTIL, services in respect of use of and access to sites in the single grid of sites and sites required to service unilateral demand, as well as the passive radio access network infrastructure assets on such sites “on the terms of a separate Master Services Agreement between JVCo and such operator (each to be on identical terms)”.

Vodafone and CTIL entered into a separate Master Services Agreement in 2012 (“the 2012 MSA”). The copy of the 2012 MSA which we have seen is undated, but there was evidence that it was entered into with effect from 12^th November 2012. The 2012 MSA was amended and restated with effect from 22^nd March 2017 (“the 2017 MSA”) and 23^rd July 2019 (“the 2019 MSA”), and was then terminated and replaced by a new MSA with effect from 7^th January 2021 (“the 2021 MSA”). It was common ground between the parties that the 2012 MSA applied to the Vodafone Site. It was accepted by the Respondents, in the course of the Trial, that the 2021 MSA does not apply to the Vodafone Site. We were also not required to consider the terms of the 2017 and 2019 MSAs.

The subsequent sharing of mobile communications sites between Vodafone and Telefonica explains why the Alienation Clause was varied, by the Deed of Variation, to permit Vodafone to share the Vodafone Site and the Rights (the rights contained in the 2003 Agreement) with Telefonica. As we have noted above, the Vodafone Site, being located in the east of the country, falls within Telefonica’s area of responsibility. As we understood the evidence, CTIL provides services to Telefonica pursuant to a master services agreement which is said to mirror the terms of the 2021 MSA and applies to the Vodafone Site. We assume that this is because Telefonica has assumed responsibility for the Vodafone Site. We also assume that this is why it is accepted that the 2021 MSA does not apply to the Vodafone Site. As Ms Murphy explained the position, in closing submissions, the 2021 MSA does not apply to the Vodafone Site because it is classified as an Other Operator MORAN Site, as defined in the 2021 MSA.

As with the Contribution Agreements, the meaning and effect of the 2012 MSA was in dispute between the parties. We will also need to return to the 2012 MSA, later in this decision.

CTIL was itself designated as a Code operator in 2017, as a WIP or tower company. As explained above, CTIL was originally established in 2012 as a joint venture company by Vodafone and Telefonica. Vodafone and Telefonica originally held equal shares in CTIL. The evidence was that Vodafone sold its shareholding in CTIL to a company within the Vantage Towers group (a major European tower company group) in 2021, and Telefonica also sold some of its shareholding to a third party in 2023. The consequence of this is that CTIL is no longer under the control of Vodafone and/or Telefonica, but stands as an independent WIP company and, effectively, a competitor of Icon.

In Vodafone’s submissions at the Trial it was suggested that Vodafone retained some form of shareholding in CTIL. A document to which some reference was made in the course of the Trial was CTIL’s annual report for the year ended 31^st March 2022. We noted, from the information contained in this report, that the parent company of Vantage Towers AG was described as Vodafone GmbH. The overall picture in this respect was somewhat opaque, and was not investigated in the course of the Trial. If it is the case that Vodafone retains, directly or indirectly, some shareholding in CTIL, it was not suggested that this interest gives Vodafone control over CTIL. We therefore proceed on the basis that CTIL now stands as an independent WIP, as opposed to its former role as the joint venture company of Vodafone and Telefonica.