Back in play: Merger prospects in UK mobile resurrected
- Publisher Enders Analysis.
- Publish Date October 8, 2020
- Sector 5G, Telecom, UK.
- Company

- With the European Commission’s decision to block the H3G/O2 merger annulled and with new H3G management sounding a very pro-consolidation tone, the prospect of mobile operators going from four to three in the UK seems to be back on the cards
- Both H3G/Vodafone and H3G/O2/Virgin Media combinations seem possible although each has its own complexity—existing network sharing arrangements being one of them
- With 5G delays and mounting costs following the decision to ban Huawei, consolidation is increasingly feeling like the most viable option for H3G whose returns are already too low and falling rapidly

Contents
Executive Summary
Scale at the heart of H3G’s woes
Sector shrinking in spite of booming demand
H3G’s financial performance is deteriorating
European Commission merger-blocking decision overturned
Two would-be suitors in the frame
What about the towers?
Capacity MVNO a likely remedy
Competitive intensity likely sustained with remedies
List of charts/tables
Figure 1: UK MNO Market Shares, 2019
Figure 2: Contract subscribers (m)
Figure 3: Mobile service Revenue (£m)
Figure 4: Last 12 months data traffic by operator (PB)
Figure 5: Service revenue per GB by operator (£)
Figure 6: ROCE using spectrum at current value
Figure 7: UK mobile market service revenue growth
Figure 8: H3G service revenue and EBITDA growth
Figure 9: Spectrum holding by operator (MHz)
Figure 10: Vodafone forecast use of cash (€m)
Figure 11: UK mobile networks and infrastructure