Telia Company and Telenor Group (Nasdaq: TELN) announced on Tuesday an agreement to join forces and share their radio access networks in Denmark in a bid to cut costs. (See Telia, Telenor Team Up in Denmark .)

Telenor and Telia -- which are the second- and third-largest mobile operators in Denmark, respectively -- will share 2G, 3G, and 4G cell sites as well as base stations, including antennas, towers and transmission equipment. The operators will not share core networks.

The operators will also create a new company to operate the joint network. Financial details of the partnership or of cost reduction targets were not disclosed.

According to TeliaSonera's president of mobility services Håkan Dahlström, the cost savings will come from having fewer sites to operate and maintain. Dahlström told Light Reading Mobile that it will take a couple years for the full shared network to be completed as the operators will dismantle some sites and build new ones.

Both operators in their first quarter earnings reports noted that Denmark was a particularly challenging market for them. Telenor CEO Jon Fredrik Baksaas stated in the operator's first quarter report that there was more price competition in Denmark and that "comprehensive measures on cost reductions are required."

Today's network sharing announcement looks like one of those measures.

As for the network suppliers, both operators' primary RAN vendor in Denmark is Nokia Siemens. TeliaSonera also uses some RAN equipment from Ericsson in Denmark.

This isn't the first foray into network sharing for either operator: In Sweden, TeliaSonera shares its 3G network with Tele2 in Sweden, while Telenor shares its LTE network with Tele2. (See Swedish Operators Join Forces in LTE Race.) Why this matters
The news is further evidence of network-sharing momentum as mobile operators in crowded and competitive markets seek ways to reduce costs.

It also illustrates what market conditions are likely to spur network sharing agreement. Denmark, for one, is particularly ripe for such arrangements.

"Network refresh programs and LTE can be a trigger for network sharing discussions, especially in Europe's more competitive markets," says Heavy Reading senior analyst Gabriel Brown. "Denmark, with four operators, needs rationalization of some kind. TDC, the market leader, is perfoming well, and at 45 percent market share, there's not a huge amount left for Telenor, Telia, and 3. "The economics of running four separate networks is no longer viable in such a small competitive market and this type of network sharing deal is good for the participants," he added. "In some markets Telia and Telenor are arch enemies, but in this case they both benefit."

For more
This is just the latest network-sharing deal in Europe.