3UK CEO David Dyson urged watchdog Ofcom to impose “fairly significant restrictions” on BT in the country’s upcoming spectrum auction, warning that its acquisition of EE has given it a commanding position in the market.
Dyson, speaking in an interview with the Financial Times (FT) for the first time since his own company’s proposed merger with O2 collapsed, claimed BT’s tie-up with mobile market leader EE could enable it to now outbid rivals, with it already holding “close to half” of the spectrum available.
“The combination of BT and EE is incredibly strong financially,” he told the FT. “It has got the financial ability to outcompete everyone in the market in how much they are willing to pay.”
Dyson continued to suggest that BT “could make life difficult” for its rivals by strategically bidding in the next auction, which is expected to be held before the end of this year, and restrict them from increasing their own spectrum portfolio.
FT cites a report from financial services firm Citi which suggests BT accounts for 42 per cent of UK mobile spectrum, with 28 per cent used by Vodafone, 14 per cent by O2 and 15 per cent by Three.
Dyson also called for the same restrictions that he wants placed on BT, to be placed on number two player Vodafone, as Ofcom reportedly still considers how to design the next auction.
If the restrictions are brought in, BT could be forced to give up some existing spectrum before it is allowed to buy any more.
Analysts were surprised BT was not asked to give up spectrum before it approved the £12.5 billion tie-up with EE, reports FT, but also notes that Three could have bought more spectrum in previous auctions.
Ofcom should “rebalance the distortion”
3UK’s proposed deal with O2 was also designed to boost its spectrum holdings, before being blocked by European regulators on anti-competition grounds, among other factors.
National regulator Ofcom was also not keen on the deal, with it reducing the UK market from four to three players, and Dyson said it is now time to maintain that stance.
“Ofcom wants credible operators. But to be credible you need enough spectrum,” he said. “Hopefully Ofcom will make some pro-competition choices in the design of the auction and ideally start to rebalance the distortion.”
Dyson added that 3UK’s parent company CK Hutchison would continue to support the unit so long as “we can make the business model work”, amid speculation that it could rethink its position in the UK following the failed O2 deal.