Three acquires UK Broadband ahead of 5G roll-out
(Image Credit: Three)
With 5G on the horizon, Three UK is making preparations with its acquisition of UK Broadband for £250 million.
UK Broadband, the parent company of London-based broadband provider Relish, was a subsidiary of Hong Kong-based communications firm PCCW. Back in 2012, UK Broadband led the market by switching on 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 network was sure to have been one deciding factor in Three’s decision to acquire the company; allowing Three to expand beyond its current mobile-only offering in a nation becoming ever more attracted to multi-play bundles.
According to CCS Insight research, 79% of UK households will have signed up to a multi-play service bundle of two or more services from the same provider by the end of 2019. Furthermore, CCS predicts a subscription to a three-service bundle will be the most popular over the next 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, it'll be the exclusive content on offer that'll set providers apart. It's little wonder we're seeing a frenzy of acquisitions as leading players scramble to secure assets."
While the acquisition of Relish’s assets will allow Three to gain a small foothold in the broadband market, we have to look beneath the surface for the real purpose of why Three decided to spend £250 million on the company.
Relish uses the 3.4GHz band to connect its customers but these frequencies are earmarked for use in the rollout of 5G. While few current mobile devices support the acquired spectrum, it will help Three with a quicker roll-out of the next-generation mobile network and enable the operator to perhaps even lead the market as UK Broadband did with 4G back in 2012.
Ofcom plans to auction 150MHz worth of spectrum in the 3.4GHz band later this year and UK Broadband was set to bid in the auction. Three’s acquisition removes a player from the market who could have stood in the way of the operator gaining vital spectrum.
A ‘Make The Air Fair’ campaign was launched by Three last year and called on UK telecommunications regulator Ofcom to restrict the amount of spectrum operators can own after being outbid by larger rivals such as BT/EE and Vodafone in previous auctions. Three claims it carries more than 35 percent of the UK’s data traffic, but EE and Vodafone own almost 75 percent of the country’s mobile airwaves between them.
Three attempted to acquire Telefonica-owned O2 last year, but the deal was blocked after Ofcom and the EU Commission decided the reduction of operators in the market would lead to less competition and harm consumers. If the acquisition was allowed to proceed, the merged companies would have rivaled EE and Vodafone in both spectrum ownership and number of subscribers.
What are your thoughts on Three’s acquisition of UK Broadband? Let us know in the comments.
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