- The £15 billion merger of Vodafone and Three creates the UK’s largest mobile operator.
- But the Competition and Markets Authority warns this could affect prices and quality.
Mobile customers could pay higher prices if the merger between Three and Vodafone is allowed to go ahead, the competition watchdog has warned.
In June 2023, Three and Vodafone announced plans to merge in a £15 billion deal that would create the UK’s largest mobile network.
But the Competition and Markets Authority fears that a shrinking provider market could drive up prices for all mobile phone customers, not just those of Vodafone and Three.
Any rise in mobile phone prices would only compound steep bill increases of up to 7.9 per cent on airtime that will hit customers from next month.
Price panic: The competition watchdog believes reducing the number of UK mobile networks from four to three would mean less incentive for companies to keep prices low.
The CMA said: “The CMA is concerned that the deal, which brings together two of the UK’s four mobile network operators, could result in mobile customers facing higher prices and reduced quality.
“The CMA fears that the combination of these two activities will reduce rivalry between mobile operators to win new customers. Competitive pressure can help keep prices low and provide a strong incentive for network operators to improve their services, notably by investing in network quality.”
There are only four mobile networks in the UK: Vodafone, Three, O2 and EE.
Other mobile companies such as Sky Mobile, Lebara and Myca Mobile rely on the four existing networks to connect their customers.
The CMA believes that reducing the number of mobile networks from four to three could have a disastrous effect on competition.
The watchdog said it was concerned that remaining mobile networks would have less incentive to keep prices low and invest in their services.
Vodafone and Three have five days to respond to the CMA before it launches a second, more in-depth investigation.
CMA decision-maker Julie Bon said: “Although Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has failed to see There is currently enough evidence to support these claims.
“Our initial assessment of this deal has identified concerns that could lead to higher prices for customers and reduced investment in UK mobile networks.” These elements warrant further investigation unless Vodafone and Three can come up with solutions.
The price of airtime increases
Mobile phone users are already facing price hikes of up to 7.9 percent on the airtime portion of their bill.
These mid-contract increases are expected to take place from March to May and will see many broadband and mobile phone companies pass on inflation-related cost rises – often with extra fees thrown in for good measure.
Most suppliers will base their price increases on the December 2023 Consumer Price Index (CPI) inflation figure of 4 percent.
The biggest price rises so far this year have come from EE, BT, Three and Vodafone, which will charge most customers an increase of 7.9 per cent, or inflation of 4 per cent plus 3. Another 9 percent.
Regulator Ofcom is considering banning these inflation-linked price rises from this summer, but not in time to stop this year’s rises.
