Three 5G rollout will be affected if mast sale is blocked

Three’s parent company CK Hutchison has rebuffed suggestions from competition authorities that the proposed sale of UK mobile towers to Cellnex would negatively impact competition and has warned that its rollout of 5G could be affected if the deal was blocked.

Spanish-based Cellnex leases out access to ‘passive’ infrastructure such as mobile towers to mobile operators so they can install their active equipment such as antennas to power their services.

As an independent operator, Cellnex can maximise the value of these assets by securing arrangements with multiple providers.

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Cellnex Three mast sale

The Competitions and Markets Authority (CMA) initiated a ‘Phase 2’ investigation in July because it fears that Cellnex, which also purchased Arqiva’s assets in 2020, would have too much of an advantage. It believes CK Hutchison could have secured an alternative buyer what would have posed fewer issues.

In documents submitted to the watchdog, first spotted by The Register, the two companies said the deal was “strongly pro-competitive” and reflected a wider trend in the industry for operators to spin off or sell their passive infrastructure to third parties in order to raise revenues for network construction.

Telefonica has sold its European and Latin America towers, while Vodafone has moved its assets into a separate entity that has floated on the stock market. CK Hutchison’s €10 billion deal with Cellnex also includes towers in Austria, Denmark, Ireland, Italy, Sweden – transactions which have been approved by the relevant competition authorities in each country.

Cellnex says the mobile market will benefit from its ability to offer third parties access to the masts and accelerate the rollout of 5G across the UK from all operators. Meanwhile, CK Hutchison says the deal will unlock vital funds for its own rollout

“In the UK in particular, the proceeds from the Proposed Transaction will enable Three to focus on developing its mobile network and facilitate the rollout of its 5G network, while benefitting from significant additional financial capacity to support future growth and investment in its network,” said the submission. “[Three] is the smallest of the four MNOs in the UK and faces considerable challenges

“A quick and comprehensive 5G network rollout will enable [Three] to become a more effective and stronger competitor in the mobile market which will lead to significant consumer benefits in the UK mobile market overall.

“UK consumers will be significantly worse off without the Proposed Transaction.”

Via The Register