The U.K. Competition and Markets Authority says the proposed acquisition of mobile cell tower company CK Hutchison Networks Europe Investments by Cellnex UK Limited would be anti-competitive.
It is easy to see why the CMA is concerned: Cellnex in the United Kingdom already has 80 percent to 90 percent ownership of existing macrocelll tower sites, with coverage of 90 percent to 100 percent of the population.
To be sure, the proposed transaction involves a wide number of countries in Europe, not just in the United Kingdom. And definitions matter. By some estimates, independent tower companies have between 75 percent and 100 percent control of the market.
The caveat is that telcos often own equity in the “independent tower companies.” The assets are moved from direct operations and fully-consolidated ownership, getting towers “off the books.” But telcos often retain investment stakes in the spun-out entities.
The CMA concern is that the larger deal would result in a near monopoly of macrocell tower sites in the United Kingdom, at least of tower company providers. The only other supplier with a similar presence is Cornerstone Telecommunications Infrastructure (CTIL), a joint venture between O2 and Vodafone, some would note.
BT, for example, concurs with the CMA market share analysis.
Without some asset spinoffs, Cellnet is going to face regulator opposition to the deal, as Cellnet would have overwhelming market share in the United Kingdom, in line with the CMA estimates.
As with other complicated deals, one way to satisfy regulators would be for Cellnet to spin off or sell some of the U.K. towers to another tower company, to reduce total U.K. market share.
By some other analyses, mobile operators have become dependent on third party supply of macrocell capacity. In the United Kingdom, Ireland, Italy Portugal and the United Kingdom, mobile operators no longer directly own their tower assets.
That makes a near-monopoly by Cellnet worrisome.
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