UK regulator clears Cellnex’s purchase of 6,000 UK cell towers

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Britain’s competition watchdog has approved Spanish cell tower operator Cellnex’s takeover of CK Hutchison’s 6,000 UK assets, provided it sells at least 1,000 cell towers to ensure competition isn’t stifled.

The purchase, now approved by the Competition and Markets Authority, was the final piece in a larger €10 billion deal Cellnex signed with Hong Kong-based CK Hutchinson in 2020 to acquire 24,600 telephone poles in Austria, Denmark, Ireland, Italy and Sweden and Great Britain.

The completed transaction will have a significant impact on Three UK, owned by CK Hutchinson and the fourth largest network provider in the UK. It will give it €3.7 billion to invest in a network that lags well behind its competitors.

Almost 20 years after its inception and despite efforts to disrupt the market and increase market share, Three remains the smallest of all major UK operators.

Karen Egan, Analyst at Enders Analysis, said: “If they are to have any chance of surviving as a standalone mobile network operator in the UK, they need to stop the downward spiral of poor network perception, fewer customers and lower returns [and] lower investments.”

Three’s capital spending through 2020 was half that of its peers, Egan added, and while the company subsequently doubled spending, it hasn’t been able to match Vodafone, O2 and EE.

The modest remedies requested by the CMA – that it divest about 1,000 UK sites that geographically overlap with assets it is acquiring from CK Hutchinson – have also raised hopes that the department might take a slightly more lenient stance on UK telecoms consolidation could market.

The British arm of the Three brand was forced to abandon its £10.25 billion takeover of Telefónica’s O2 network when European regulators rejected the deal in 2016, dealing a serious blow to Three’s growth ambitions.

Vodafone Chief Executive Nick Read has recently highlighted the need for more consolidation in the UK telecoms market and expressed his desire to merge the company’s spin-off tower business, Vantage Towers, with another European tower operator.

CK Hutchinson completed the sale of its tower assets in Austria, Denmark and Ireland in 2020. The approval and completion of sales in Italy and Sweden will take place in 2021.

Cellnex shares rose 3 percent to €40.66 in Friday morning trading.

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