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INFOGRAPHIC: UK Mobile Operator Q4 Performance

by Philip Kendall | 4月 15, 2016

With EBITDA margins among the lowest in the EU, the scale benefits of Three’s planned purchase of O2 in the UK certainly make sense from a business perspective. CK Hutchison’s proposed concessions to push through the deal seem to focus on guarantees of capacity made available for MVNOs like Virgin and Sky, and guarantees that it will honour existing network sharing arrangements that both Three and O2 have in place. However, UK authorities are lobbying the European Commission hard to block the deal, most recently in the Competition and Markets Authority’s (CMA) latest letter to the Commission.

Strategy Analytics has just published our Wireless Operator Performance Benchmark report for Q4 2015, containing operational and financial information for operators covering 80% of the world’s mobile users. In an accompanying Insight report, Orange/Bouygues Merger Failure Highlights UK & Italy M&A Challenges, we look at:

  • Whether the decision by Orange and Bouygues to call off their merger plans points to challenges for the deals in the UK and Italy (Tre and WIND);
  • How EBITDA margins vary by market structure and operator position: higher margins in two or three player markets compared with four player markets have only really emerged in the last two years;
  • Whether “consolidation is now ruled out for the long term” in France, as Bouygues suggest.
We do believe EC approval for the Three/O2 deal is more likely than not, though whether the deal ultimately goes through will depend on what kind of concessions and competition remedies it attaches to the approval. The CMA’s back-up position if the EC won’t block the deal is that they at least require CK Hutchison to sell off sufficient network and spectrum assets to allow a viable fourth network operator to emerge in the UK. As the Infographic below shows (click to enlarge), spectrum is one of the weakest aspects of a combined Three/O2, so could be a real sticking point.
 
INFOGRAPHIC: UK Mobile Operators, Q4 2015
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