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Three to expand into fixed broadband

Mobile network operator Three is to acquire UK Broadband, heralding an expansion into fixed broadband services for the first time

Mobile network operator (MNO) Three is to buy UK Broadband, the company behind internet service provider (ISP) Relish, for £250m, expanding its business into consumer broadband services for the first time.

UK Broadband, which was awarded 124MHz of spectrum in the initial 4G auctions, offers 4G broadband and data services to wholesale and channel partners, as well as supplying bespoke campus solutions for enterprises.

Its consumer arm, Relish, has 15,000 customers in the UK – most of them in London – which it serves through a mixture of its own 4G mobile spectrum and fibre backhaul. The firm launched in 2014 and, since then, has scooped several innovation awards from the major broadband comparison websites.

It sells the Relish product on the promise that by using 4G mobile broadband to deliver broadband connectivity, instead of the standard landlines owned by BT’s infrastructure arm Openreach, it can activate a service much more quickly, and serve the growing number of customers who do not have landlines.

Dave Dyson, chief executive 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.”

A previous attempt by Three’s parent, CK Hutchison, to expand its UK business with the acquisition of O2 came to nothing after the proposed multibillion-pound purchase was nixed by the European Commission (EC) in May 2016.

Part of Three’s motivation for trying to buy O2 was to grow the amount of mobile spectrum it held to compete more effectively against the two larger UK MNOs, EE and Vodafone, which between them own the majority of usable spectrum in the UK.

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Since being refused permission to buy O2, Three has been lobbying hard for Ofcom to address the perceived unbalanced distribution of spectrum in the UK. The acquisition of UK Broadband may go some way to redressing Three’s grievances, giving it access to more spectrum to support its mobile services, and a foothold in the home broadband market, where both EE and Vodafone are also present.

In addition to the purchase price, a deferred £50m will be made available by Three as a credit towards the establishment of a mobile virtual network operator on Three’s mobile network.

UK Broadband will continue to operate Relish as it does currently until the deal is completed, which is expected to happen in mid-2017. .........................................................................................

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