Telecoms engineers

Regulator investigates sale of UK telecoms towers over duopoly fears

Image credit: Eakkachai Nimaphan | Dreamstime.com

Mobile customers could face higher prices if a proposed takeover of CK Hutchison-owned telecoms towers by Spanish firm Cellnex is allowed to go ahead, the Competition and Markets Authority (CMA) has warned.

The proposed deal will see Cellnex buy all of CK Hutchison’s UK passive infrastructure assets in an £8.6bn deal that also involves assets in several other European countries.

The telecoms towers are primarily used by wireless communication network providers to host their electronic equipment to in order to operate their networks.

At present, Cellnex is one of only two large independent suppliers of passive infrastructure in the UK; it gained a market-leading position last year after it acquired the telecommunications division of Arqiva.

The only other supplier with a similar presence is Cornerstone Telecommunications Infrastructure Limited (CTIL), a joint venture between O2 and Vodafone that was originally set up to provide services for its parent companies but became an independent supplier in early 2021.

In May, the CMA launched an inquiry into the Cellnex deal and referred it to an in-depth probe by an independent inquiry group in July. Two months later, BT warned that the deal would hand too much power to Cellnex and pose competition concerns across the sector.

Having reviewed a range of evidence in relation to CK Hutchison’s internal decision-making, the CMA has provisionally found that, if the deal with Cellnex had not been agreed, then its passive infrastructure assets would most likely have been sold to an alternative buyer, which demonstrates that the deal with Cellnex was not the only option available to it.

The CMA’s investigation raised concerns that the sale of this business to Cellnex, rather than an alternative buyer, may prevent the emergence of a third major national player – instead leaving a duopoly in which Cellnex and CTIL would account for over 90 per cent of the market.

It therefore believes that such a deal could result in higher prices or lower quality services for mobile network operators, with a knock-on adverse impact for users of mobile networks across the UK.

Richard Feasey, chair of the independent inquiry group, said: “Mobile phones are an essential part of everyday life for people and businesses.

“This deal may prevent the emergence of a third major national provider of the critical infrastructure on which mobile operators depend, leaving them with only a choice of only two major suppliers. Less competition could mean higher prices or worse terms for both mobile operators and their customers.”

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