Three seizures on the 5G boom as the sale of mobile masts renews discussions on the merger

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Mobile operator Three is considering a sale of pylons in an attempt to profit from the shift to 5G networks and the soaring valuations of telecommunications infrastructure.

Industry sources said Three, who is owned by Hong Kong billionaire Li Ka-shing, is considering an initiative that could raise billions of dollars and pave the way for a merger with a rival.

It is said that a range of potential buyers circle the process. They include Cellnex, a £ 24 billion giant listed in Madrid.

Earlier this year it completed a £ 2bn acquisition of Arqiva’s mobile arm, making it Britain’s largest independent mast supplier, leasing infrastructure from the four major mobile operators .

These companies are popular with investors looking for long-term returns, as well as the potential for growth, as 5G is expected to require denser networks of towers.

Three is considering selling a set of assets that may include the rights to operate hundreds of towers on the city center rooftops, acquired in its £ 300million takeover from wireless connectivity provider UK Broadband in 2017.

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

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

Most of Three’s existing masts are currently tied to MBNL, an infrastructure joint venture with EE, BT’s mobile unit. However, it is understood that Three is exploring the possibility of leaving the partnership and selling their masts.

Such a disruption could also allow BT to sell more of its towers to help fund its 5G and fiber broadband rollout.

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

In addition to raising liquidity, an effective break-up of MBNL could make it easier for Three to review a merger with a rival.

Its attempt to buy O2 for £ 10.3 billion was blocked four years ago over competition concerns, in part driven by complaints from Vodafone that the ‘four-to-three’ deal had disrupted its own mast sharing agreement.

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

The win sparked a new round of consolidation speculation in an industry that struggled with low returns due to high fixed costs.

However, O2 is currently in the process of merging with cable operator Virgin Media.

This prompted analysts to suggest that Three, the smallest operator in the mobile market, could team up with number three Vodafone, which is also banking its masts across Europe.

Three declined to comment.

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