(Image Credit: Three)
With 5G approaching, Three UK has moved to strengthen its position by acquiring UK Broadband for £250 million.
UK Broadband, the parent company of London-based fixed broadband provider Relish, was previously a subsidiary of Hong Kong communications group PCCW. In 2012, UK Broadband led the way by launching the country’s first commercial 4G network.
Dave Dyson, Chief Executive of Three UK, said: “UK Broadband gives us an opportunity to expand our ambition to provide high quality and great value internet connectivity for UK consumers.”
Relish’s fixed broadband infrastructure is a clear strategic asset for Three. The acquisition lets Three move beyond its mobile-only offerings at a time when UK households increasingly prefer multi-play packages combining broadband, mobile, TV and landline services.
Research from CCS Insight indicates that by the end of 2019, 79% of UK households were expected to subscribe to a multi-play bundle from a single provider. CCS also predicts three-service bundles will become the most popular option over the following five years.
“Our surveys reveal that consumers find it more convenient and better value to buy broadband, mobile, TV and landline access from one company, so established providers that can offer all these services are in a strong position,” says Paolo Pescatore, Director of Multi-Play and Media at CCS Insight. “Once multi-play packages are the norm, exclusive content and differentiated services will set providers apart. It’s little wonder we’re seeing a wave of acquisitions as leading players secure strategic assets.”
While the Relish business gives Three a foothold in the fixed broadband market, the acquisition’s deeper value lies in spectrum and 5G readiness. Relish operates using the 3.4GHz band, a frequency range earmarked for 5G deployments. Although few current consumer devices yet support that spectrum, owning these frequencies positions Three to accelerate its 5G rollout and potentially lead the market as UK Broadband did with 4G in 2012.
The UK regulator Ofcom planned to auction 150MHz of spectrum in the 3.4GHz band later in the year, and UK Broadband had intended to participate. By acquiring UK Broadband, Three not only gains access to operational spectrum but also removes a potential competitor from the auction, simplifying its path to securing vital airwaves.
Last year Three launched a “Make The Air Fair” campaign urging Ofcom to limit the amount of spectrum any one operator can hold. The campaign followed previous auctions where larger rivals such as BT/EE and Vodafone secured large shares of spectrum. Three has argued it carries more than 35% of the UK’s mobile data traffic, while EE and Vodafone together control nearly 75% of the available mobile spectrum.
Three previously attempted to buy Telefónica-owned O2, but regulators blocked the deal after Ofcom and the European Commission concluded that reducing the number of national operators would harm competition and consumer choice. Had that merger been approved, the combined operator would have rivalled EE and Vodafone in both spectrum holdings and subscriber numbers.
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