Three Buys Relish Operator UK Broadband In £250m 3.4GHz Spectrum Grab

Three is buying fixed wireless broadband provider UK Broadband for £250 million in a move that the mobile operator hopes will strengthen its network and gain valuable high range spectrum.

UK Broadband operates the Relish service in central London and a number of other networks across the UK. For example, it was awarded government funding to improve superfast broadband coverage in Swindon in 2015.

It uses the 3.4GHz band to connect its customers, but these frequencies are being earmarked for the rollout of 5G, and Ofcom will sell 150MHz worth of 3.4GHz airwaves in an auction later this year.

Three Relish

Three will pay £250 million when the deal is completed, which should be mid-2017, and £50 million in the form of a credit towards a mobile virtual network operator (MVNO) agreement in the future.

UK Broadband will become a wholly owned subsidiary of Three, but it is unclear what the operators ultimate motives are with the acquisition. UK Broadband has 15,000 UK customers at present, but a Three spokesperson was unable to give Silicon any more information.

“UK Broadband gives us an opportunity to expand our ambition to provide high quality and great value internet connectivity for UK consumers,” said Three CEO Dave Dyson.

Three has been particularly vocal about its belief that BT should be banned by Ofcom from bidding for any of the 3.4GHz spectrum up for grabs (it is already barred from the 2.3GHz auction set to be held at the same time).

It has launched a pressure group and advertising campaign aimed at encouraging the public to support calls for a spectrum cap of 30 percent of the total bandwidth available.

In 2014, the Advertising Standards Authority (ASA) censured Relish for misleading claims made in its commercial materials about cost and coverage.

Analysts see the move as a first step for Three into the broadband and public sector market.

“Although Three will acquire new spectrum, the acquired band is not compatible with most of today’s mobile devices, meaning that it cannot be put to immediate use,” said Kester Mann, analyst as CCS Insight. “It is likely to be a key band for 5G services, which will launch in the UK from 2020. Therefore, today’s deal does little to address its immediate concerns.

“Three remains in a precarious position as a mobile-only provider in a UK market rapidly evolving to multiplay services. It does not have the share of spectrum or scale of operation to challenge bigger rivals such as BT and Vodafone. UK Broadband has a tiny customer base of just 15,000, a fraction of the more-than-20 million it would have gained had its bid to acquire O2 been successful last year.

“The deal removes a likely bidder at the UK spectrum auction, anticipated for later in 2017. UK Broadband was almost certain to take part given its aspirations to expand its service beyond London, Swindon and Reading. A successful outcome is vital for Three’s long-term UK future and has spurred a strong recent campaign aimed at securing more favourable conditions.”

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