4, 3, 2...
Well another couple years when Ofcom can't go running to EU for help keeping to its dogma of 4 networks,Three could have another play for O2.
After being smote by regulators in its attempt to buy O2 for £10.25bn, Three has snapped up UK Broadband for a cool £250m instead. UK Broadband provides broadband access to 15,000 customers in the UK and under the deal will become a wholly owned subsidiary of Three UK. Dave Dyson, chief exec of Three UK, said: “UK Broadband …
BT did have a load of mobile spectrum and an MVNO though - it just hadn't got very far with building its physical network. BT being slow at building a network doesn't look like a great reason to allow the merger Perhaps Three should have closed down its network before trying to buy O2? On OFCOMs logic that would be OK :-/
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Well actually I think it's probably a pretty smart move. It's a small ISP so it's a doddle to migrate systems (relatively) to their own billing systems for example. But more importantly they have all the links and processes in place for dealing with BT openreach and the like. Throw in a sizable chunk of marketing money to get customers with a massive advertising campaign. So three can now start to offer stupid broadband deals to three customers not to mention playing BT at their own game of free wifi. And three are finally sorting out wi-fi calling so maybe not entirely unrelated.
So daft, probably not so much. It's just not going to happen overnight but I'd say there aren't going to go down without a fight. And given how they changed the mobile market (a bit like orange did all those years ago too) I'd put money on some market disruption coming, or at least an attempt.
How much or how successful time will tell. Also, their customer service can suck badgers balls sometimes so they may want to work on that too before trying their hand at broadband.
"they have all the links and processes in place for dealing with BT openreach and the like."
Who has all the links and processes for BT Openreach etc?
And nor do PCCW or Netvigator or Now Broadband or Relish or UK Broadband or whatever they'll be called next week. They were (are? allegedly?) *fixed wireless* broadband providers, who started their UK career by buying up all the UK fixed wireless access broadband licences in post-auction deals, and then doing nothing with the licences, for years. See e.g.
Some analysis of that, and the mysterious role of the Hutchison companies in this picture, would be welcome in the next article on this subject.
I suspect the interest is in the spectrum rather than the subscribers. £250m for 120MHz of LTE spectrum? That more than doubles 3's holdings. Admittedly it's in the 3.4GHz band, which is "not immediately useable" according to OFCOM, but as UKBB have subscribers there must be a few routers available at least.
The stories in the financial sections this morning shed rather more light on this. The official justification appears to be that the value is in the spectrum bandwidth owned by the company. It might get become and important asset should it be included in the 5G technical standards.
However, perhaps just as important, 3 is owned by on of the richest man in Asia (Li Ka-shing), and UK Broadband was a venture by his son (Richard). It appears that the price paid will just about cover the investment and accumulated operating losses of UK Broadband...
The customer base of 15,000 is worth between £2m and £3m. You might attribute some value to the Relish brand but not much. The value is in the spectrum.
The magic thing about 3.4GHz is that it's flavour of the month for 5G and has been allocated some experimental status. It's not enough bandwidth for Ericsson's vision of 5G which wants 500MHz of contiguous spectrum and so is looking at much higher frequencies but it's plumb where Huawei see 5G.
Unfortunately this move goes to re-enforce Ofcom's (unstated) reason for blocking the Three/O2 sale. If the two companies had merged there would have been one fewer customer for the (delayed for over a year), auction (https://www.theregister.co.uk/2015/10/26/ofcom_spectrum_auction/) for 3.4GHz and 2.3GHz. Ofcom is all about "recognising market value" for the spectrum, and Three has just put a price on it. And Ofcom has to be disappointed at how low that is.
Ofcom claims it's about keeping competition in the market but if you look at what has happened at retail, all the real networks have increased prices. Only the MVNOs keep the MNOs under price pressure.
The 2.3GHz is now interesting because there are quite a lot of phones which support it.
Also reported in the FT (paywalled https://www.ft.com/content/9e607b6e-ec7e-11e6-ba01-119a44939bb6 )
"Three UK has paid £250m to buy lossmaking wireless internet provider Relish as a first step into the home broadband market by Britain’s fourth-largest mobile group.
Three is owned by CK Hutchison, controlled by Asia’s richest man Li Ka-shing, while UK Broadband, the company behind Relish, is owned by Hong Kong-based telecoms company PCCW, which is run by his son Richard Li.
The deal will also provide Three with additional mobile spectrum, which can be used for any future launch of 5G services. The mobile phone operator abandoned plans for a £10.25bn takeover of larger rival O2 last year after the deal was blocked by European competition regulators.
PCCW has been trying to crack the British market since 2004, when it acquired a licence to operate a WiMax network that offered faster and more wide-ranging signals than WiFi. It initially launched as an internet provider called Now Wireless but rebranded in 2014 as Relish, offering a line rental-free broadband service in inner London.
And via Bloomberg (not paywalled):
"Li Ka-Shing to Buy U.K. Broadband Assets From Younger Son
by Prudence Ho
February 6, 2017, 8:36 PM EST February 7, 2017, 3:52 AM EST
Billionaire Li Ka-shing agreed to buy a telecommunications business in the U.K. from his younger son for 300 million pounds ($374 million) in a shuffling of assets within Hong Kong’s richest family.
Through CK Hutchison Holdings Ltd.’s Three U.K., Li will pay his son’s PCCW Ltd. 250 million pounds in cash and 50 million pounds in credit vouchers for U.K. Broadband, which holds spectrum and wireless network assets, according to a filing in Hong Kong on Monday. PCCW, controlled by billionaire Richard Li, expects to post a gain of about HK$1.3 billion ($168 million) from the deal, it said.
[continues; includes video]"
It's what taking back control is all about, innit. Lend us a quid till the end of the week, guvnor. My BT Bill's gone through the roof.
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