Competition concerns in Italy and the UK could mean a smaller transaction than originally planned
A €10bn deal across Europe: In November 2020, Cellnex agreed to acquire 24,600 towers from CK Hutchison across Austria, Denmark, Ireland, Italy, Sweden, and UK for €10bn. This would bring Cellnex to control over 100k tower sites across 12 European countries in total. The deal was subject to regulatory approval, which was granted swiftly in four countries (Austria, Denmark, Ireland, and Sweden) allowing the two companies to finalise the deal in January 2021. At that point, two were still outstanding.
Italy has concerns: This week, the competition authorities in Italy and in the UK launched independent investigations into the deal. The Italian authority, the AGCM, has already identified competition concerns that will need to be addressed. The market there is considered to be highly concentrated, and Cellnex is already the larger operator not vertically integrated with an MNO. If the merger were to go ahead, Cellnex would have a 70% share in the market for third-party hosting sites in Italy, and it would acquire the third largest operator. The AGCM also notes that the second operator in this market, Inwit, is a joint venture between TIM and Vodafone, with very limited openness to hosting third-parties on its towers.
The UK investigation is just starting: On 13 April, the CMA started its investigation into Cellnex’s acquisition of Three’s towers in the UK. Unlike the Italian authority, the CMA has not yet made clear its thoughts. The regulator is seeking input from stakeholders until 27 April, and only then will decide whether there is a risk of a substantial lessening of competition that warrants a full probe.
