Mobile phone bills could rise by as much as £300 a year as a result of the merger of the UK operations of Vodafone and the owner of Three, a trade union has said.
Unite has been a vocal critic of the proposed deal, which would create the UK’s largest mobile operator, and said that it is a “terrible” deal that also poses risks for national security.
“This evidence if clear: this merger is a terrible deal for Britain,” said George Stevenson, an investigative researcher at Unite, who is due to give evidence at a hearing exploring the deal being held by the business and trade select committee of MPs on Tuesday.
“When you reduce competition, prices go up, jobs get slashed, and the promise of investment turns out to be hollow,” he said. “We will continue to fighting to ensure this harmful merger is scrutinised thoroughly by regulators and government alike.”
In 2016, the Competition and Markets Authority (CMA) and the European Commission blocked Three’s attempted takeover of O2, arguing that it would have risked higher prices. The two companies had attempted to allay concerns and sweeten their position with regulators by offering to freeze prices for UK consumers for five years.
The strategy is one that could be emulated by Vodafone and Three UK, which have promised £11bn of investment in 5G infrastructure over the next decade if the deal is cleared.
Last week, the UK competition watchdog offered rivals and other interested parties the chance to submit views on the proposed merger. The CMA has said it was providing an “early opportunity” for interested third parties to comment on the impact of a merger of the two companies on the UK telecoms market.
The companies are the UK’s third and fourth biggest mobile operators. The combined company will, if the merger is completed, have more than 27 million subscribers, leapfrogging EE, owned by BT, and Virgin Media O2, owned by Spain’s Telefónica and the US-listed company Liberty Global.
The deal is likely to face close scrutiny from the CMA, although last year the UK telecoms regulator, Ofcom, changed its long-held stance, saying it was now more open to consolidation in the sector. It had previously argued that dropping to only three networks in a country could harm consumers.
The government is likely to “call in” the deal for scrutiny under the National Security and Investment Act 2021, which allows ministers to block transactions linked to important national assets if they are deemed to harm national security.
Vodafone UK has a number of government contracts and Three UK is owned by the Hong Kong-based CK Hutchison, which may raise concerns about foreign joint ownership of a key national asset, particularly given the city’s status as part of China.
Vodafone UK has public sector contracts with the Ministry of Defence, the Ministry of Justice, NHS 111 and local police forces.
A spokesperson for Vodafone UK said: “We have no plans to change our pricing strategy.
“We are committed to maintaining our presence in the flexible, contract-free market where there are no annual price increases and our social tariffs in both mobile and fixed markets.
“The objective of our joint business plan is to strengthen, expand and enhance our joint network, as a result, we will have a very strong incentive to price keenly to make maximum use of the expanded capacity.”
