Monday 6 February 2017 6:08 pm

Three buys UK broadband in £300m deal

Mobile operator Three has acquired UK Broadband in a £300m deal. The deal comes just months after the European Commission blocked Three's parent company CK Hutchison from a £10.3bn takeover of O2.

UK Broadband, the company behind home broadband service Relish, has 15,000 customers across the UK.

Three will pay £250m for snapping up UK Broadband while a deferred £50m will be made available as a credit towards a mobile virtual network operator (MVNO) agreement on the telecom company's network. It expects the transaction to "complete mid-year".

The deal will help Three grow its spectrum capacity which might come in handy for launching 5G services in the future.

Read more: Virgin Media: Government broadband policy is a "muddle"

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.”

Kester Mann, principle analyst, operators at CCS Insight, said: “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. 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."

Mann warned that Three “remains in a precarious position as a mobile-only provider in a market 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-20m it would have gained had its bid to acquire O2 been successful last year,” Mann added.