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CMA Launch Deeper Probe of Three UK Mast Sale to Cellnex

Wednesday, July 28th, 2021 (5:09 pm) - Score 1,296
Cellnex-European-Mobile-Mast-Tower

The Competition and Markets Authority (CMA) has launched a deeper Phase 2 investigation to examine any “competition concerns” that may surround the £8.6bn (€10 billion) sale of CK Hutchison Holdings (Three UK) interests in European tower assets and businesses to Spanish company Cellnex.

The CMA noted last week that Cellnex, which only recently gobbled up Arqiva’s UK masts and rooftop sites for £2bn, was already, by “some distance“, the largest independent supplier of mobile towers in the United Kingdom. As such the company’s move to acquire some c.24,600 sites (masts and rooftop sites) from CKH, which was announced last November (here) and includes around 6,000 sites in the UK, might raise competition concerns.

Ironically, one of the biggest opponents to the Arqiva deal was Three UK (CKH), which initially warned that it could make Cellnex too dominant (here), not least because they would gain “control of over 80% of independent mobile sites in the UK” and there would thus no longer be much competition when negotiating future access to such sites (i.e. higher prices). Despite that, the CMA allowed the Arqiva sale to go through.

However, allowing Cellnex to continue its buying spree by gobbling up CKH’s UK cell sites might be a step too far for the regulator. The CMA warned last week that, “Given the loss of this alternative competition, and the limited competition that Cellnex currently faces from smaller independent tower providers and mobile network operators, the CMA is concerned that this deal could result in higher prices or lower quality services.”

The market watchdog then gave CKH just 5 working days to offer “legally-binding proposals” to address their concerns (here), but failing that they would move to a deeper Phase 2 investigation. Yesterday, the CMA confirmed that they had not received any acceptable proposals and would thus proceed to an “in-depth investigation” of the merger.

CMA Statement

The CMA has referred the anticipated acquisition of the passive infrastructure assets of CK Hutchison Holdings Limited and its subsidiaries in the UK by Cellnex UK Limited for an in-depth investigation, on the basis that, on the information currently available to it, it is or may be the case that this merger has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

In fairness, Phase 2 probes aren’t uncommon for big deals and concerns can often evaporate during their course, but not always and this case may be more complex. Cellnex separately notes that they have already completed five out of the six deals they’d reached with CKH, which leaves just the UK to go.

We continue to believe that this is a strongly pro-competitive deal which will create firm incentives to unlock, improve and extend mobile coverage, including 5G, across the whole of the UK,” said a spokesperson for Cellnex.

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