Would Hutchison quit the UK?
3UK's owner reported to be threatening to pull back from the market if it does not get LTE spectrum guarantees
Published: 22 May, 2012
Hutchison Whampoa is reportedly threatening to pull out of the UK market if its 3UK subsidiary does not get spectrum in the country's troubled spectrum auctions. These much delayed sales of 800MHz and 2.6GHz licences are scheduled for late 2012, but are still surrounded by arguments over caps and how to ensure a level playing field.
According to The Sunday Times newspaper, Hutchison's managing director Canning Fok has warned prime minister David Cameron that his firm will stop investing in the UK, and even pull out altogether, if it does not get spectrum guarantees in the auctions, although the company officially denied the reports.
Whatever pressures it may be bringing to bear on the government, 3UK certainly fears that it will be left in an uncompetitive position if special measures are not taken to keep it viable in 4G spectrum. The firm is the smallest UK cellco and may have less ability to bid large sums than its larger rivals, Everything Everywhere (an Orange/T-Mobile venture), Vodafone and Telefonica O2. Also, it has no 2G spectrum to refarm and so supplement any new 4G licences it may win.
By contrast, EE hopes - regulator willing - to deploy LTE in its 1.8GHz 2G spectrum as early as this fall, while Vodafone and O2 both own 900MHz frequencies which could be used for 4G. The other carriers want their ability to acquire 800MHz licences capped so that they do not end up with a major advantage in the coveted sub-1GHz bands, which support cost effective build-out in rural areas as well as strong indoor penetration. Vodafone and O2 argue that 900MHz is less desirable than 800MHz because it will have a smaller global ecosystem.
In a statement, Hutchison said it was "happy with its current investments in the country", and was "actively looking at various different investment opportunities in the UK". David Dyson, head of 3UK, recently reiterated calls for the auction to go ahead this year, but only with "fair" conditions, and has hinted that his firm could make a deal to share EE's 1.8GHz spectrum or network. EE and 3UK have an infrastructure sharing joint venture, MBNL, which may also own and run 4G networks post-auction.