BT has bought the mobile provider EE. O2 is expected to merge with Three. Is it time that the telecoms market was looked at by competition authorities? What do you think about these mergers?
BT today announced that it had bought mobile firm EE for £12.5bn, subject to approval by BT shareholders and the Competition and Markets Authority (CMA).
BT’s takeover of EE will create a telecoms giant covering broadband, phone lines, TV and mobiles. It said in a statement:
‘The combination of EE and BT will provide customers with innovative, seamless services that combine the power of fibre broadband with wi-fi and advanced mobile capabilities.’
What will happen to prices?
On its merger with EE, BT’s CEO Gavin Patterson hinted at cheaper deals for customers, saying that bundled fixed line and mobile services have reduced prices.
But there are other goings on in the telecoms industry. Sky has announced that it’s to offer a mobile service using O2’s network, and TalkTalk has bought some Virgin Media and Tesco Broadband customers.
Given that Three is also expected to buy O2, will these deals really be good news for us consumers? TalkTalk CEO Dido Harding has expressed concerns that mergers could lead to higher prices:
‘In Austria, where four mobile operators went into three, prices went up. People are right to be suspicious about too much consolidation.’
Competition in the mobile industry
We think that competition authorities should look at both the proposed mergers and the market in the round to make sure that you’re protected from unfair price increases or poorer service as a result of less competition.
This market has shown it has a long way to go to work well for its customers with a history of mid-contract price rises and millions of mobile customers paying more than they should. Unbelievably, people trust banks more than they trust mobile firms – there’s a danger that these mergers could damage that trust further.
What do you think of BT’s announced purchase of EE, and the expected merger between Three and O2? Do you think it could be good news for customers, or are you disappointed by less competition in the mobile market?
[UPDATE 28/10/15] – The Competition and Markets Authority has provisionally cleared BT’s takeover of EE, saying that it was ‘not expected to result in a substantial lessening of competition in the UK’.
John Wotton, chair of the CMA inquiry, said:
‘Having considered all the evidence, the group does not provisionally believe that, in a dynamic and evolving sector, it is more likely than not that BT/EE will be able to use its position to damage competition or the interests of consumers.’
Our executive director Richard Lloyd commented on the CMA’s announcement:
‘Fewer players in any market is rarely a good thing, and with the proposed O2-Three merger also due to be considered, it would be very concerning if the UK were to end up with only three mobile network operators. Ofcom now needs to make sure consumers are protected from higher prices or poorer service as a result of the merger.’
Loading ...
