EIRCOM AND O2 have signed a 10-year deal to create the first mobile network-sharing arrangement in Ireland.

The agreement will result in the two telcos co-operating in areas such as site equipment, power supply, technology and transmission sharing.

The existing sites of both operators will also be consolidated and new sites will be jointly built.

Eircom and O2 operate from about 3,500 sites around the country. The two companies said there would be no transfer of assets and spectrum would not be shared under the new deal.

O2 and Tesco Mobile (which operate on the O2 network) and Meteor and eMobile (run by Eircom) will continue to compete with each other in the mobile market.

Paul Donovan, chief executive of Eircom, described the deal as “passive sharing”. A dedicated team, comprising existing network staff from both companies, will be set up to manage the day-to-day build and operation of the distinct networks. Similar arrangements are operated in a number of other European countries. In Britain, O2 and Vodafone have a network-sharing arrangement.

The deal comes as both companies are finding it difficult to retain customers and maintain revenues in the recession.

Stephen Shurrock, chief executive of Telefonica O2 Ireland, described the deal as a “common-sense business decision” for both parties.

“There will be joint planning of the network to ensure that we deploy the assets in the most cost-effective way,” said Mr Donovan.

According to Mr Shurrock, the deal would provide better coverage for customers of both companies in rural locations and allow for “infill in urban areas”.

It will also enable both parties to expand bandwidth capacity to provide for the increase in data usage created by smartphones and tablet computers.

Mr Shurrock said both would consult ComReg and the Competition Authority on the agreement. “We will be working with them now so they can understand what we’re proposing.”

Neither side would put a figure on the investment or the likely savings. However analysts show savings of up to 30 per cent in network costs have been achieved.

The arrangement is not expected to involve a significant number of job cuts at either company nor will the deal affect Eircom’s current roaming agreement with Vodafone.

Eircom roams on the Vodafone network to allow it to provide mobile services on the western seaboard. The deal expires in June 2012. Mr Donovan declined to comment on whether Eircom would seek to renew its deal with Vodafone. The Vodafone deal was “standalone”, he said.