{"id":36052,"date":"2023-10-18T08:52:34","date_gmt":"2023-10-18T07:52:34","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=36052"},"modified":"2023-10-18T08:52:34","modified_gmt":"2023-10-18T07:52:34","slug":"three-uk-and-vodafone-pledge-no-plans-for-post-merger-price-rises","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2023\/10\/three-uk-and-vodafone-pledge-no-plans-for-post-merger-price-rises.html","title":{"rendered":"Three UK and Vodafone Pledge No Plans for Post Merger Price Rises"},"content":{"rendered":"

Mobile operators Three UK<\/a> and Vodafone<\/a> have informed MPs that their plans for a mega-merger (here<\/a>), 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.<\/p>\n

The deal, which is currently being reviewed by the competition watchdog (here<\/a>), would see Vodafone<\/a> hold a 51% slice of the business and CK Hutchison (Three UK<\/a>) retain 49%. But the operators have thus far promoted it as something that would be \u201cgreat for customers, great for the country and great for competition<\/em>,\u201d while also resulting in a major \u00a311bn<\/strong> investment to upgrade the UK\u2019s 5G<\/a> mobile (broadband) infrastructure and coverage.<\/p>\n

NOTE:<\/strong> The combined business aspires to reach more than 99% of the UK population with their 5G<\/a> Standalone (SA) network by 2034 and push fixed wireless access (mobile home broadband) to 82% of households by 2030, among other things.<\/div>\n

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).<\/p>\n

The greatest focus of any price rises, should they occur, will inevitably be coming from customers on Three UK<\/a>’s side – as well as its sibling virtual operators (MVNO) like Smarty<\/a> and iD Mobile<\/a>, which have tended to offer some of the very cheapest mobile plans in the whole market. By comparison, Vodafone<\/a>’s plans tend to be a bit more premium, although they do have a modestly cheap virtual sibling in VOXI<\/a>.<\/p>\n

According to the BBC<\/a>, Three UK’s General Counsel, Stephen Lerner<\/strong>, told MPs there were “no merger related price rises<\/em>” 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<\/em>.” 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.<\/p>\n

Vodafone’s Director of Network and Development, Andrea Dona<\/strong>, then added that their plans for offering an alternative 5G<\/a> 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 \u00a315 reduction in the bill a month… by simply having an alternative to what today is just fibre to the home<\/em>.” 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.<\/p>\n

In terms of Three UK’s “no plans<\/em>” style remark above, it’s worth highlighting that having “no plans<\/em>” today is not the same as saying you definitely won’t do it, because plans can change and often suddenly. Remember when O2<\/a>, Vodafone and Three UK all said they had “no plans<\/em>” to reintroduce EU roaming charges, before doing a dramatic U-turn less than a year after reaffirming that commitment? Consumers haven’t forgotten.<\/p>\n

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<\/a> and EE<\/a> are currently trying to tackle, years after their own merger.<\/p>\n

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.<\/p>\n

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<\/strong> (MVNO) marketplace. Except both operators are already perfectly capable of doing this competitively today, and we don’t completely buy the argument that EE<\/a> (BT<\/a>) and O2<\/a> (VMO2) dominate this space because “they have the scale and the economics to offer<\/em>” good wholesale deals. Better scale does help, but it’s not a panacea for MVNO products.<\/p>\n

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).<\/p>\n","protected":false},"excerpt":{"rendered":"

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. 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