Three UK says its 5G plans are under threat if tower merger with Euro giant Cellnex is blocked
(2021/09/20)
- Reference: 1632132125
- News link: https://www.theregister.co.uk/2021/09/20/three_uk_cellnex_cma_filing/
- Source link:
Any attempt to block Cellnex's takeover of Hutchison UK's tower network could see consumers "significantly worse off" and hamper the progress of Three UK's planned £3bn investment in 5G.
What's more, the UK competition watchdog's [1]decision to probe the deal was flawed and based on a "simplistic and misleading" assessment rather than a proper understanding of how real-world markets operate.
The claims were made in legal documents from both companies published on Friday as part of the Competition and Market Authority's (CMA) ongoing investigation into Cellnex's proposed buy of Three UK parent Hutchison's towers and other mobile infrastructure [2][PDF] .
[3]
In November 2020, CK Hutchison Holdings, the Hong Kong-based firm that owns UK network Three, confirmed plans to [4]sell its European tower business to Cellnex , the Spain-based operator of wireless telecoms infrastructure.
[5]
[6]
The Spanish towerco bought British mast outfit [7]Arqiva's telecoms subdivision for £2bn back in October 2019, and manages a portfolio of 53,000 sites across Europe.
The UK watchdog has already pointed out in a previous filing that the Arqiva deal had already made Cellnex the "largest independent supplier of mobile towers in the UK."
[8]
The latest Cellnex deal would see Hutchison pocket some €10bn split across cash and stock from flogging its masts and towers in Austria, Denmark, Ireland, Italy, Sweden, and the UK.
To date, all of the Hutchison's cross-Euro deals with Cellnex have been granted regulatory approval – except in the UK, where some 6,000 cell towers are up for grabs.
In July, the CMA confirmed plans to press ahead with a Phase 2 investigation amid concerns regarding the competitiveness of the UK's mobile industry and access to cell tower infrastructure.
[9]
At the time, Cellnex hit back saying the deal was "strongly pro-competitive" and would create "firm incentives to unlock, improve and extend mobile coverage, including 5G, across the whole of the UK."
Now, in a joint legal document submitted to the CMA on 2 September but only recently published, lawyers acting for Three and Cellnex said the sale would have "significant consumer benefits and will provide vital funds to support 3UK's £3bn+ 5G network rollout plan."
"UK consumers will be significantly worse off without the Proposed Transaction," the filing claimed.
The pair insist the agreement is "strongly pro-competitive" and "reflects worldwide market trends" where "MNOs (mobile network operators) are divesting their passive infrastructure assets, or outsourcing the management of those assets, to independent wireless infrastructure providers (WIPs)."
They also cited "self-serving comments from 3UK's competitors" for part of the CMA's decision to press ahead with the investigation.
And in an attempt to further undermine concerns that the deal might be anticompetitive, both companies insist it is "pro-competitive" because it "opens an otherwise captive internal tower network to new potential third party customers."
[10]Cellnex complains regulators waved through CK Hutchison mast buyout in Europe – only sticking point is the UK
[11]A bunch of also-RAN: Vodafone and O2 cosy up to share '5G-active' gear
[12]Vodafone on mega Euro masts biz: From our Vantage point, we want €2bn+ from towers IPO
[13]Spain's Cellnex snags Arqiva's telecoms unit for £2bn to become the UK's 'largest' wireless infrastructure operator
In a swipe at the role the regulator has played, the document said: "In the Parties' [Cellnex and Three's] view, the CMA has fallen into the error – that its own guidelines caution against – of framing the competitive assessment against a simplistic and misleading 'market share' calculation rather than an assessment of how competition in the market actually works and the extent of competitive constraints."
No one from the CMA was available for comment at the time of writing. However, the deadline for this latest round of submission is mid-to-late October. A final decision is expected in January 2022.
Elsewhere, and in a separate rebuttal earlier this month, Facebook challenged its [14]proposed acquisition to buy gif-slinger Giphy , claiming the CMA had applied the "wrong legal test" and that its provisional decision contained "fundamental errors." The deadline for final ruling in that case has been pushed back to December. ®
Get our [15]Tech Resources
[1] https://www.theregister.com/2021/07/28/cellnex_ck_hutchison_cma_inquiry/
[2] https://assets.publishing.service.gov.uk/media/614450468fa8f503c320a10d/ME.6917.20_-_Cellnex_and_CK_Hutchison_Response_to_Issues_Statement_-_Non-Confidential_Version_-_17_September_2021.pdf
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.theregister.com/2020/11/13/hutchinson_sells_masts/
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2019/10/08/cellnex_telecom_snaps_up_arqiva_for_2bn/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2021/07/28/cellnex_ck_hutchison_cma_inquiry/
[11] https://www.theregister.com/2019/07/24/vodafone_and_o2_cosy_up_to_share_5g_gear/
[12] https://www.theregister.com/2021/03/09/vodafone_vantage_towers_ipo_range/
[13] https://www.theregister.com/2019/10/08/cellnex_telecom_snaps_up_arqiva_for_2bn/
[14] https://www.theregister.com/2021/09/09/facebook_cma_giphy/
[15] https://whitepapers.theregister.com/
What's more, the UK competition watchdog's [1]decision to probe the deal was flawed and based on a "simplistic and misleading" assessment rather than a proper understanding of how real-world markets operate.
The claims were made in legal documents from both companies published on Friday as part of the Competition and Market Authority's (CMA) ongoing investigation into Cellnex's proposed buy of Three UK parent Hutchison's towers and other mobile infrastructure [2][PDF] .
[3]
In November 2020, CK Hutchison Holdings, the Hong Kong-based firm that owns UK network Three, confirmed plans to [4]sell its European tower business to Cellnex , the Spain-based operator of wireless telecoms infrastructure.
[5]
[6]
The Spanish towerco bought British mast outfit [7]Arqiva's telecoms subdivision for £2bn back in October 2019, and manages a portfolio of 53,000 sites across Europe.
The UK watchdog has already pointed out in a previous filing that the Arqiva deal had already made Cellnex the "largest independent supplier of mobile towers in the UK."
[8]
The latest Cellnex deal would see Hutchison pocket some €10bn split across cash and stock from flogging its masts and towers in Austria, Denmark, Ireland, Italy, Sweden, and the UK.
To date, all of the Hutchison's cross-Euro deals with Cellnex have been granted regulatory approval – except in the UK, where some 6,000 cell towers are up for grabs.
In July, the CMA confirmed plans to press ahead with a Phase 2 investigation amid concerns regarding the competitiveness of the UK's mobile industry and access to cell tower infrastructure.
[9]
At the time, Cellnex hit back saying the deal was "strongly pro-competitive" and would create "firm incentives to unlock, improve and extend mobile coverage, including 5G, across the whole of the UK."
Now, in a joint legal document submitted to the CMA on 2 September but only recently published, lawyers acting for Three and Cellnex said the sale would have "significant consumer benefits and will provide vital funds to support 3UK's £3bn+ 5G network rollout plan."
"UK consumers will be significantly worse off without the Proposed Transaction," the filing claimed.
The pair insist the agreement is "strongly pro-competitive" and "reflects worldwide market trends" where "MNOs (mobile network operators) are divesting their passive infrastructure assets, or outsourcing the management of those assets, to independent wireless infrastructure providers (WIPs)."
They also cited "self-serving comments from 3UK's competitors" for part of the CMA's decision to press ahead with the investigation.
And in an attempt to further undermine concerns that the deal might be anticompetitive, both companies insist it is "pro-competitive" because it "opens an otherwise captive internal tower network to new potential third party customers."
[10]Cellnex complains regulators waved through CK Hutchison mast buyout in Europe – only sticking point is the UK
[11]A bunch of also-RAN: Vodafone and O2 cosy up to share '5G-active' gear
[12]Vodafone on mega Euro masts biz: From our Vantage point, we want €2bn+ from towers IPO
[13]Spain's Cellnex snags Arqiva's telecoms unit for £2bn to become the UK's 'largest' wireless infrastructure operator
In a swipe at the role the regulator has played, the document said: "In the Parties' [Cellnex and Three's] view, the CMA has fallen into the error – that its own guidelines caution against – of framing the competitive assessment against a simplistic and misleading 'market share' calculation rather than an assessment of how competition in the market actually works and the extent of competitive constraints."
No one from the CMA was available for comment at the time of writing. However, the deadline for this latest round of submission is mid-to-late October. A final decision is expected in January 2022.
Elsewhere, and in a separate rebuttal earlier this month, Facebook challenged its [14]proposed acquisition to buy gif-slinger Giphy , claiming the CMA had applied the "wrong legal test" and that its provisional decision contained "fundamental errors." The deadline for final ruling in that case has been pushed back to December. ®
Get our [15]Tech Resources
[1] https://www.theregister.com/2021/07/28/cellnex_ck_hutchison_cma_inquiry/
[2] https://assets.publishing.service.gov.uk/media/614450468fa8f503c320a10d/ME.6917.20_-_Cellnex_and_CK_Hutchison_Response_to_Issues_Statement_-_Non-Confidential_Version_-_17_September_2021.pdf
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.theregister.com/2020/11/13/hutchinson_sells_masts/
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2019/10/08/cellnex_telecom_snaps_up_arqiva_for_2bn/
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YUiwO1J1wojsbJAHD8mQWwAAAQg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[10] https://www.theregister.com/2021/07/28/cellnex_ck_hutchison_cma_inquiry/
[11] https://www.theregister.com/2019/07/24/vodafone_and_o2_cosy_up_to_share_5g_gear/
[12] https://www.theregister.com/2021/03/09/vodafone_vantage_towers_ipo_range/
[13] https://www.theregister.com/2019/10/08/cellnex_telecom_snaps_up_arqiva_for_2bn/
[14] https://www.theregister.com/2021/09/09/facebook_cma_giphy/
[15] https://whitepapers.theregister.com/
Re: Methinks they do protest too much.
Outski
on pedant
I think you mean the volume and strength of companies complaints about regulators "doing it wrong" is directly proportional for the necessity of said regulator to bring out the microscopes, rubber gloves & sledgehammers
off pedant
That said, I entirely agree with your general sentiment
Re: Methinks they do protest too much.
Outski
Also, SuperNovae
And yes, I'm aware of Muphry making a mess of the syntax grammar in my first reply :o)
could see consumers "significantly worse off"
Anonymous Coward
and children will die. Three bleating is pathetic.
markberry
Will it make much of a difference? I barely get a 3G signal most of the time!
"Pro-competitive"
General Purpose
>both companies insist it is "pro-competitive" because it "opens an otherwise captive internal tower network to new potential third party customers."
This seems rather like Amazon arguing that seizing the lion's share of more and more markets is "pro-competitive" because little independent suppliers can sell through Amazon Marketplace (until Amazon undercuts them).
'Regulators don't know what they're doing'
jmch
Ah, this old chestnut, which basically boils down to - I can't make this business profitable within market rules, so I'm going to pay someone to get the rules changed or go ahead regardless and deal with the fines later. Either of which are cheaper and easier than competing on a level playing field with anyone else.
Methinks they do protest too much.
The harder, louder, & longer a company (or companies) complain that the regulators are "doing it wrong" is inversely proportional to the necessity for said regulations to be enforced with an iron fist. The claims that it will *improve* competition should be a giant red flag, a fireworks display of warning flares, & a message spelled out in SuperNovi that reads "BULLSHIT!"...