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Telefonica Restores O2 Phone Network After U.K. Failure

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July 12 (Bloomberg) -- Telefonica SA said all of its 23 million U.K. mobile-phone customers can again make phone calls and send text messages after a network failure cut those services yesterday.

The company’s O2 unit also restored the data network that allows users to surf the Web, Telefonica said in a statement. Customers should turn their phone off and on if they’re still having problems, the company said.

O2’s British unit had been experiencing network failures since as early as yesterday afternoon. The outage raises questions about the readiness of the U.K. telecommunications infrastructure for the London Olympics, said Steven Hartley, an analyst at researcher Ovum.

“The huge influx of visitors to London ahead of the games, will cause network traffic spikes, putting pressure on the U.K.’s mobile networks,” he said. “If there is a major public transport failure, the spilling over of people from a location where high network traffic has been anticipated to less well-prepared peripheral cells could prove disastrous.”

Telefonica fell as much as 2.8 percent to 9.81 euros in Madrid and was down 2.6 percent at 3:15 p.m. in Madrid trading. The stock had declined 25 percent this year through yesterday.

France Telecom SA, the country’s largest phone company, reported a software bug on July 6 that caused a similar network failure for about 10 hours. France Telecom has said it will offer customers free calling, texting or Web access in September to compensate them for the failure.

Network Deals

In the U.K., Telefonica and rival Vodafone Group Plc agreed in June to operate and manage a single network grid that will run two competing nationwide mobile Internet and voice networks.

Telefonica, which operates in 25 countries, is seeking similar deals with other local networks to lower its costs and improve network quality, a person with knowledge of the matter said in June. The person asked not to be identified because the plans aren’t public.

Deals like this are becoming more common as carriers in Europe look for ways to lower the costs of expansion amid increasing competition. Deutsche Telekom AG and France Telecom pooled their U.K. wireless assets into the Everything Everywhere brand in 2010. Telefonica already has network sharing arrangements with T-Mobile in the Czech Republic and an agreement in Spain with Vodafone.

To contact the reporters on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net; Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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