Three seizes on 5G boom as mobile masts sale renews merger talk

The mobile operator Three is exploring a sale of masts in a bid to cash in on the shift to 5G networks and spiralling valuations for telecoms infrastructure.

Industry sources said Three, which is owned by the Hong Kong billionaire Li Ka-shing, was examining a move that could raise billions in cash and pave the way for a merger with a rival.

An array of potential buyers are said to be circling the process. They include Cellnex, a £24bn Madrid-listed giant.

Earlier this year, it completed a £2bn takeover of the mobile arm of Arqiva, making it Britain’s biggest independent mast provider, renting infrastructure to all four main mobile operators.

Such businesses are prized by investors seeking long-term returns, as well as the potential for growth, as 5G is expected to require denser networks of masts. 

Three is considering whether to sell a package of assets that may include the rights to run hundreds of masts on city centre rooftops, acquired in its £300m takeover of the wireless connectivity provider UK Broadband in 2017.

Further assets could come from the pub group Greene King, which is also controlled by Mr Li under his property holding company CK Asset.

It has 3,000 pubs, many with rooftops and car parks that are suitable for hosting mobile network infrastructure.

Most of Three’s existing masts are currently tied up in MBNL, an infrastructure joint venture with EE, BT’s mobile unit. However, it is understood Three is exploring whether it could exit the partnership and sell its masts.

Such upheaval could also allow BT to sell more of its masts to help fund its rollout of 5G and full-fibre broadband.

Last year, it sold Cellnex a 20-year lease of 220 high towers and committed to exploring more opportunities with the Spanish company.

As well as raising cash, an effective break-up of MBNL could make it easier for Three to revisit a merger with a rival.

Its attempted £10.3bn takeover of O2 was blocked four years ago over competition concerns, partly driven by complaints from Vodafone that the “four-to-three” deal would have disrupted its own mast-sharing arrangement.

Vodafone shares infrastructure with O2. Three recently overturned the European Commission decision to block the merger in the European Court of Justice.

The victory has sparked a fresh round of consolidation speculation in a sector that has struggled with low returns driven by high fixed costs.

O2 is now in the midst of a merger with the cable operator Virgin Media instead, however.

That has prompted suggestions from analysts that Three, the smallest operator in the mobile market, could join forces with Vodafone, the number three, which is also cashing in on its masts across Europe.

Three declined to comment.

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