Consumers fear that if Three acquires O2, prices for phone calls and internet access on the go may increase.
What was a rumour is now confirmed talks between the Spanish-based Telefónica who owns O2 and Three’s Hutchison Whampoa.
The two companies are discussing the buyout of O2 for £10.25 billion, a move that would make Hutchison (currently Britain’s smallest network operator) the largest in the country. Boosting Three’s current 7.5 million strong customer base up to 31.5 million.
Kester Mann, Analyst, operators, CCS Insight, commented: “If approved, the deal would transform the UK mobile market. It would create a new leader with over 30-million customers and a market share of 41 per cent. It would also relegate Vodafone to last place in its home market.
“The agreement is a win-win for both companies, which were looking increasingly vulnerable as pure-play mobile operators in a market rapidly transitioning towards multi-play.”
The main concern here for consumers, is that such a move would increase prices. Three to-date has offered cheap rates to combat being at the lower end of the network market, but as it would be shot to the top it would not be surprising if prices for calls and mobile web would shoot up with it.
Mann continued: “The deal might not necessarily be good news for consumers. Evidence in other European markets shows that mobile tariffs tend to rise following in-market consolidation. Regulations will be taken to ensure this is not the case in the UK.’