Telefonica's O2 and Vodafone have stepped up their challenge to British market leader BT by extending their network sharing deal to cover 5G.

This will enable the two companies to accelerate the deployment of the faster mobile service at a lower cost. 

The two groups said today they would share the fibre that runs between their individual core networks and jointly-owned masts to improve their offering. 

However they will become more autonomous in major cities, giving the two firms the freedom to decide how much they invest in equipment to boost data capacity.

They could also seek a third party to take a stake in the joint venture at a later date. 

"We believe that these plans will generate significant benefits for our business and our customers as we move into the digital era of connected devices, appliances and systems on a mass scale," Vodafone's UK chief executive Nick Jeffery said. 

The two companies formed a joint venture in 2012 to help share the cost of rolling out faster networks in the UK as customers sought ever more data to access the internet from their phones. 

They said today they would explore "a potential monetisation" of the joint venture after the new arrangements have been finalised.