The UK’s Competition and Markets Authority “might consider remedies to maintain retail competition, including requiring the merged firm to reserve a portion of network capacity for virtual players,” said Assembly Research analyst James Robinson in an emailed comment, referring to “virtual” mobile network operators which don’t own their own networks, such as Tesco and Sky. He added that he expects the CMA will want to protect against consumer price rises amid a cost of living crisis in the UK.
“This deal has been mooted for a while, and makes a lot of sense given the trend toward fixed and wireless network convergence,” said Matthew Howett, founder of London-based analyst firm Assembly Research.
A deal that brings together a fixed-line operator with a mobile provider is more likely to be approved by regulators than mobile-to-mobile consolidation, Howett said. “It doesn’t reduce competition in mobile, and preserves the four-player market that Ofcom and others have been committed to,” he said, referring to Britain’s telecommunications regulator.
A route forward is unclear. Some rebels may accept a cap lower than 35%. But others are siding with Trump, arguing that security concerns and alleged Chinese government influence over the company mean that it should be banned completely. Huawei has repeatedly said such fears are unfounded. The latter route would be expensive and convoluted: It would delay Britain’s 5G roll-out by two years and cost the U.K. economy 6.8 billion pounds ($8.5 billion), according to London-based technology analyst firm Assembly Research, harming productivity and risking the loss of key investment in 5G technology like connected factories and automated vehicles.
“It comes at an unwelcome time,” said that report’s author, Matthew Howett. “We’ve all come to realize just how important and crucial connectivity is, and anyone who’s had a poor experience will want those upgrades to happen yesterday, not in another 24 months’ time.”
As policymakers and regulators have been creating conditions to spur more competition with BT, rivals including Liberty Global Plc’s Virgin Media and Goldman Sachs Group Inc.-backed CityFibre have been jumping in to commit billions of pounds to infrastructure plans.
“Those plans risk being shelved overnight,” Matthew Howett, an analyst at Assembly, said in an email. “This is a spectacularly bad take by the Labour Party.”
Analysts are skeptical the government could roll out fiber more effectively than private industry and Howett pointed to delays and budget overruns from a state-led effort in Australia.
Huawei Vice President Victor Zhang said in a statement Monday evening that the government review “gives us confidence that we can continue to work with network operators to roll out 5G across the U.K.”
Based on discussions with three of the U.K.’s four carriers, analyst firm Assembly estimated in April that restrictions on the use of Huawei could delay the 5G roll-out by between 18 and 24 months, resulting in a 4.5 billion pounds ($5.6 billion) to 6.8 billion pound hit to the U.K. economy.
