Three UK Acquire Fixed Wireless 4G Operator UK Broadband Ltd for £250m

Mobile operator Three UK has today announced a surprise deal to acquire UK Broadband Ltd. (PCCW), which operates fixed wireless broadband ISP Relish Wireless via a 4G based network in Swindon, Reading and central London using spectrum in the 3.5GHz to 3.6GHz bands.

UK Broadband Ltd. has long held an aspiration to launch a truly national UK network (they already have the licences), although so far the business has struggled to turn that dream into a reality and they’ve been bleeding an awful lot of money on it. UKB’s results to 31st December 2015 showed revenue of £3.28m (up from £1.53m in 2014) and an operating loss of £25.07m (£24.16m in 2014); this loss rises to £37.4m when you include other losses (e.g. foreign exchange).

However UKB has remained upbeat and their results highlighted that the spectrum they own (this also includes some in the 3.9GHz, 28GHz and 40GHz bands) could also start making it into modern handsets (Smartphones etc.) from the end of 2017, which they saw as being a big potential area of future growth and no doubt this is something that might have attracted Three UK.

On top of that Ofcom have already signalled that some of the spectrum in related bands could be used for future 5G Mobile services. Suddenly this deal starts to make a lot of sense.

Dave Dyson, CEO 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.”

The situation does of course raise a rather significant question mark over the future of UKB’s Relish Wireless ISP, which represents a different proposition from what Three UK is used to dealing with. According to the press release, UK Broadband Ltd. provides broadband access to 15,000 customers in the UK and will now become a wholly owned subsidiary of Three UK.

The transaction is expected to complete by mid-2017 and Three UK will pay £250 million upon completion. A deferred £50 million will also be made available as a credit toward an MVNO agreement on Three’s network.