Three UK has reached an agreement to acquire UK Broadband Limited. The transaction is subject to the fulfilment of a number of conditions before completion can take place, expected to be mid-year.
Dave Dyson, Chief Executive of Three UK, (pictured) said: ‘UK Broadband gives us an opportunity to expand our ambition to provide high quality and great value internet connectivity for UK consumers.’
UK Broadband Limited provides broadband access to 15,000 customers in the UK and would become a wholly owned subsidiary of Three UK. The company provides broadband access via a combination of licenced spectrum and fibre backhaul, and will continue to operate as it does currently until the deal is completed.
Three UK will pay £250 million for UK Broadband Limited upon completion. A deferred £50 million will be made available as a credit toward an MVNO agreement on Three’s network.
Three UK currently carries 35% of the UK’s mobile data traffic, with a network covering 98% of the UK population. Its attempts to buy O2 last year were rebuffed by the European Commission and it has been a longstanding critic of the UK's spectrum policy. Three is behind the Make the Air Fair campaign, pressuring Ofcom to impose a 30% cap on ownership of the 2.3 GHz and 3.4 GHz mobile broadband spectrum mobile in the forthcoming spectrum auctions.
UK Broadband offers 4G LTE broadband and data services to wholesale partners, resellers and consumer customers within the coverage areas of London, Reading and Swindon, and builds bespoke wholesale campus solutions to meet specific commercial needs. UK Broadband switched on the UK’s first 4G LTE commercial system in February 2012.
While the UK Broadband acquisition may benefit Three’s MVNOs by allowing them to offer a better data service, Chris Pateman of the Federation of Communication Services says that there are several possible motivations behind the buyout.
‘UK Broadband’s Relish brand is a natural match for Three’s disruptive image’ says Pateman. ‘it would appeal to the same demographic. But it’s hard to say whether Relish’s London-based model could be rolled out on a national basis.’
‘Another possibility is that this is a spectrum grab. It could be possible to use UK Broadband’s 3.5Ghz spectrum as part of a carrier aggregation system, to build a ‘bigger pipe’ for 4G services using any 2.3 GHz or 3.4GHz spectrum Three obtains in the auction. If that’s the case, Three will play its cards very close to its chest to avoid competitors jumping in to compete for the available spectrum.’