Three and O2 UK customers could get five-year price freeze in effort to appease regulators

While BT's acquisition of EE is now a done deal, the other mega-merger set to shake up the UK's mobile market is still awaiting regulatory approval - and so far, it seems that authorities aren't inclined to give it the thumbs-up any time soon.

Mobile network Three, part of Hong Kong's Hutchison Whampoa group, agreed terms last year with Spanish telecoms giant Telefónica to take over its O2 UK business in a £10.25 billion deal. But earlier this week, the head of the UK's telecommunications regulator, Ofcom, said it was recommending that the proposed merger should be blocked by the European Commission.

In an attempt to address concerns that the deal would potentially have a negative impact on competition in the UK mobile market, resulting in higher prices for consumers and businesses, Canning Fok, managing director of Three's parent company, told The Financial Times that it would freeze prices for customers of both networks for five years if the deal gets the go-ahead.

Fok said that "every cost efficiency that combining the businesses achieves will be shared with our customers. Like for like, customers' bills will go down."

The European Commission is expected to publish its 'statement of objections' to the acquisition today, which is likely to reference concerns over the fact that the combined group would create a 'super-carrier' with more customers than any other UK network. Indeed, around 4 out of every 10 mobile connections would end up in the hands of the merged company, while the number of major UK network operators would drop from four to just three.

Regulators have already raised concerns over the issue of future network access for other smaller operators who use the physical network infrastructure owned by Three and O2. Hutchison is proposing an arrangement of "fractional shared ownership interests in our network capacity", allowing other carriers to buy up chunks of its network capacity, which Fok said was "unprecedented in the UK telecom wholesale market".

Unsurprisingly, Fok maintains that the deal would be a win for the UK market, allowing it to establish a true competitor that can "stand up to the new leviathan BT, not to mention to the old top-of-the-heap predator Vodafone."

For now, though, it appears that Three and O2 still have quite a bit of work to do before they can convince regulators that bringing the two networks together will be in the best interests of consumers, business customers, and competition across the market.

Source: The Financial Times

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