Three UK and Vodafone Pledge No Plans for Post Merger Price Rises
Mobile operators Three UK and Vodafone have informed MPs that their plans for a mega-merger (here), which will reduce the number of primary networks from four to three, will not result in price increases for consumers. In some cases, the pair suggests, bills might actually fall. But such statements should be taken with a pinch of salt.
The deal, which is currently being reviewed by the competition watchdog (here), would see Vodafone hold a 51% slice of the business and CK Hutchison (Three UK) retain 49%. But the operators have thus far promoted it as something that would be “great for customers, great for the country and great for competition,” while also resulting in a major £11bn investment to upgrade the UK’s 5G mobile (broadband) infrastructure and coverage.
However, critics of the agreement have expressed concern that it could also result in some negative impacts, such as less competition at the wholesale (MVNO) and retail levels. Not to mention the possibility of job losses and security concerns. But one of the biggest consumer concerns will be the fear that it could also force customers to take more expensive packages (price rises).
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The greatest focus of any price rises, should they occur, will inevitably be coming from customers on Three UK’s side – as well as its sibling virtual operators (MVNO) like Smarty and iD Mobile, which have tended to offer some of the very cheapest mobile plans in the whole market. By comparison, Vodafone’s plans tend to be a bit more premium, although they do have a modestly cheap virtual sibling in VOXI.
According to the BBC, Three UK’s General Counsel, Stephen Lerner, told MPs there were “no merger related price rises” in their joint business plan and that such changes were “not part of the transaction rationale, and we are not planning any increases in prices.” We should point out that this remark is likely to be excluding the impact of any traditional price hikes, which both operators already adopt on an annual basis.
Vodafone’s Director of Network and Development, Andrea Dona, then added that their plans for offering an alternative 5G SA based fixed wireless broadband service to UK homes might actually reduce prices: “We’ve done a study that shows that can bring up to a £15 reduction in the bill a month… by simply having an alternative to what today is just fibre to the home.” But that’s a different product from regular mobile plans, which is where most of the concerns arise, and mobile operators have often over-promised and under-delivered in the area of fixed wireless broadband solutions – performance and coverage remains highly variable.
In terms of Three UK’s “no plans” style remark above, it’s worth highlighting that having “no plans” today is not the same as saying you definitely won’t do it, because plans can change and often suddenly. Remember when O2, Vodafone and Three UK all said they had “no plans” to reintroduce EU roaming charges, before doing a dramatic U-turn less than a year after reaffirming that commitment? Consumers haven’t forgotten.
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Much will depend upon the approach that both operators take to the merger. For example, if the plan is to adopt a single outlet and branding then that will inevitably result in winners and losers among existing customers (stemming from a singular set of packages), but if they maintain their brands – albeit controlled via a central group – then prices might remain low on Three. But the latter does tend to result in duplication and extra costs for the operators themselves, which is something BT and EE are currently trying to tackle, years after their own merger.
Suffice to say, we wouldn’t be surprised if both operators make a pricing related commitment to the competition watchdog (CMA), which may offer to protect pricing from hikes. Such an approach is not uncommon, although the commitments usually only last for a limited number of years.
Finally, Andrea Dona also argued that the deal could actually increase competition, such as by enabling the new firm to compete with other mobile operators in the Mobile Virtual Network Operator (MVNO) marketplace. Except both operators are already perfectly capable of doing this competitively today, and we don’t completely buy the argument that EE (BT) and O2 (VMO2) dominate this space because “they have the scale and the economics to offer” good wholesale deals. Better scale does help, but it’s not a panacea for MVNO products.
The CMA has a tricky balancing act to perform with this one. In our view, the merger stands a better chance of being approved than rejected in the current climate, but it may come down to a question of concessions (i.e. what the parties can offer to help placate the concerns).
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Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and Linkedin.
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I saw those statements on the BBC yesterday afternoon, and the ‘“no plans” to reintroduce EU roaming charges’ came immediately to mind when I read the “no merger related price rises” and “not part of the transaction rationale, and we are not planning any increases in prices” statements in the submission. Now call me cynical and (I’m going to be), but when I see any corporate statements like that my immediate reaction is that those statements are obviously true, but that’s only because they’ve left them out of the (merger in this case) documentation.
“no plans” – one of the great misdirection statements. I currently have no formal plans to eat lunch, but that may change in a few hours when reality strikes my stomach.
Fool me once shame on you, fool me twice shame on me.
Exactly this – Vodafone has zero credibility when it comes to promising ‘no plans for increases’. I think it’s shameless they have the cheek to even say it – they will raise prices because they will present themselves as the premier 5G Network. Three is already top of the league tables for speed (although in my view this doesn’t mean solid call coverage and capacity in specific areas) but they will use this to justify a price increase. Even if they sell some of their UK retail stores and amalgamate them in town centres – prices will still rise significantly. EE is a very expensive network and that is where Vodafone/Three will end up. My only hope is that EE will lower their prices as consumers move to the ‘fastest 5G network’ Vodafone/Three.
With the above I kinda agree, yes EE is expensive but Lyca and 1pMobile using EE for example are not, they’re dirt cheap.
While the new Vodafone/Three brand might go up in price directly, MVNO’s will still be competing with low prices. I can’t see this market changing much.
I could be wrong, but I believe Lyca does not have access to all of EEs LTE bands, whereas 1p mobile does. So it doesn’t make it a comparable alternative to EE and is inferior in some locations (especially when factoring in VOLTE and Wi-Fi Calling). I’ve also read that some MVNOs (across all networks) have lower priority than MNO users. I don’t know how accurate this is however the comments I’ve read are quite compelling on this issue.
I’m pretty sure you only notice differences in priorities when the mast is overwhelmed.
“Remember when O2, Vodafone and Three UK all said they had “no plans” to reintroduce EU roaming charges, before doing a dramatic U-turn less than a year after reaffirming that commitment?”
But O2 have retained free EU roaming – perhaps you mean EE?
They all did, barring VMO2.
However VM and O2 did promise the competition authorities they would extend the VM network to 1 million extra premises within a year of merger closing. They didn’t actually do that, and suffered no penalties for not doing it.
Is the headline correct to say they ‘pledge’ to not increase prices, given that most of the article points out how ‘no plans’ should be taken with a pinch of salt?
Having read the BBC article I was interested to see that ISPReview had something more concrete about their plans for no price increases, but that’s not the case.
The headline says “Pledge No Plans for .. Price Rises”, not “Pledge No Price Rises”
Those are very different statements. They promise they have no current plans to do this, but that doesn’t mean they won’t do so in future.
Most of the media have picked up on same the main points. As it is a Government select committee then the representatives can be held accountable for their oral evidence being truthful and a transcript should be forthcoming.
They will have chosen their words carefully including “No plans”. However it will still be easy for them to simply introduce new products and plans combining their new joint network capacity at different data allowances and pricing. So if you are on a current plan it may not increase (although annual rises will still apply) but your service may be restricted particularly with the closure of 3G on a network restricted SIM.
It’s a game. They just want the merger to pass unopposed. But if they do let slip it is a promise/pledge.
Ah, I’m wondering if that’s been updated since my comment (or maybe I’m just losing my marbles).
……. and other short stories.
I remember the T-Mobile/Orange merger, unlimited packages disappeared after that and didn’t return for a while after, they might not hike prices but they can water down the packages to compensate (themselves).
i have no plans to start believing anything voda say in a statement
I’ve been with three for around ten years. I pay £8 per month for unlimited minutes and 12gb data. I retain free European and worldwide calls where applicable.
I’d happily pay a few more £s per month for a more robust national network. And as soon as the 5G monopole goes up near me I’ll be trying out three 5G broadband which is currently cheaper and quicker than the local fibre offering.
Why are you paying so much? The same network will give you unlimited data for less than that.
The networks already collaborate with shared investment in masts where it suits them, see the reporting on the Shared rural network. More collaboration on network infrastructure can be encouraged/enabled by the regulator, it absolutely does not need this merger.
The reality is any merger in a marketplace with very high costs of entry will result in higher prices and poorer service for the public, that’s *the point* of such mergers – to squeeze more profit from customers who will now have fewer alternatives.
Never trust what Vodafone saying ‘no plans for increases’ are really naughty cheeky. We all know it will happen and will rise in prices.
They tell people nonsense that they will build a better 5G infrastructure, and in Chester this year the concil rejected 13 new masts. only one was accepted near the stadium. there will be no good 5g network without new masts!
EE simply put little ones on phone boxes etc…. Vodafone and 3 should innovate
“No plans to increase prices” is so deliberately misdirective that it makes it perfectly clear that they absolutely will increase prices as soon as they possibly can.
PR slime-balls…
Take netflix as an example cracking down on password sharing then putting the price up. Opportunistic corporate greed at its best.
Its like anything when it comes to merger discussions, take it with a pinch of salt. Its misdirection to keep MP’s and OFCOM happy, the reality is if/when they get their wish and push this merger through, they’ll do whatever they like regardless of any promises made along the way.
Just got rid of Three 5g broadband. Their service started super at 600mbps and dropped to less than 100,with very frequent drop outs.
Their customer service is awful.
I hope the merger direct go ahead as I joined vodaphone who are using City Fibre.
I get 1100bit with three. I dislike the company but here in London my broadband has never been better.
Are these the same companies who said they don’t plan to introduce EU roaming charges once we leave the EU?
I have been with Smarty for three years and fully expect if this merger goes thru that Smarty will be culled by the new VodaThree entity. They already offer superior cheaper SIM only deals than their parent company Three and let’s not even talk about Vodafone’s SIM deals.