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Mobile phone mergers

Changes ahead for mobile service provider market in the UK

As Three attempts to acquire 02 in a deal worth £9.5 billion and BT makes a £12.5 billion bid for the acquisition of EE it looks as though the mobile service provider market in the UK is likely to change dramatically.

If the two deals do go ahead it will leave just three significant providers competing in the UK marketplace, Three, BT and Vodafone.

EE (created by a merger between Orange and T-Mobile) was the first of the four mobile operators to launch a 4G network in the UK.  EE’s service remains the UK’s fastest and largest geographically so if BT’s bid for them is approved by the Competition and Markets Authority (CMA) the deal will create a digital and communications superpower.  BT boss Gavin Patterson is calling it a “a UK digital champion” and claims “consumers and businesses will benefit from new products and services as well as from increased investment and innovation.”

In the meantime Hutchison Whampoa, who own the Three network have been arguing that if they aren’t allowed to merge with O2 they risk being squeezed out of the market by BT.  The the proposed acquisition has been notified to the European Commission. The CMA had said they would consider as part of their investigations in to the parallel acquisition of EE by BT, as a matter of course but depending on the response from the EC there could now be a full examination of the merger by the CMA with a view to deciding whether or not even more in-depth investigation under the 2002 Enterprise Act would be warranted.

Unsurprisingly there is substantial opposition to these plans with many fearing that the reduction in choice and lack of competition will inevitably lead to higher tariffs for mobile customers.

The CMA’s inquiry group is due to deliver its report on the BT, EE merger by 23rd November 2015 so it won’t be long before we have a clearer picture of how the market might look next year.