Millions of mobile customers could pay more if two major providers merge, regulator warns
MILLIONS of customers could end up paying more money if the merger between two major mobile firms goes ahead, the competition watchdog has warned.
Vodafone and Three announced a £15billion merger last year, which would bring 27million customers together under one network.
If the deal goes ahead, it will create the biggest mobile network in the UK.
The pair said the move would help improve network quality and provide faster 5G.
But the Competition and Markets Authority (CMA) has now flagged a number of concerns about the deal, including fears it could raise prices for customers.
The CMA launched an in-depth investigation into the merger in April over fears the deal could “result in a substantial lessening of competition”.
The CMA also said it has particular “concerns that higher bills or reduced services would negatively affect those customers least able to afford mobile services as well”.
It also highlighted the fact that combining the firms would reduce the number of network operators from four to three, with EE operator BT and Virgin Media-O2 the remaining rivals.
This could negatively impact so-called virtual operators like Sky Mobile, Lyca Mobile and Lebara which “piggyback” off the big operators to provide their own mobile services.
Both parties will now work with the CMA to help address the issues raised.
Stuart McIntosh, chair of the inquiry group leading the investigation, said, he has taken a “thorough approach” when examining the mega-merger.
He explained: “We will now consider how Vodafone and Three might address our concerns about the likely impact of the merger on retail and wholesale customers while securing the potential longer-term benefits of the merger, including by guaranteeing future network investments.”
Vodafone and Three UK have said they disagree with the competition regulator’s concerns over their planned £15billion merger, saying it was “time to take off the handbrake on the country’s connectivity”.
Margherita Della Valle, Vodafone’s chief executive, said: “Our merger is a catalyst for change.
“It’s time to take off the handbrake on the country’s connectivity and build the world-class infrastructure the country deserves.
“We are offering a self-funded plan to propel economic growth and address the UK’s digital divide.”
The firms also stressed it was not a final decision and they plan on working with the CMA to secure approval.
Since the deal was announced last year a number of consumer bodies have raised concerns and argued the move will raise prices and lower service quality for consumers.
BEFORE YOU SWITCH
If you’re struggling to pay for your phone or internet, talk to your provider, Citizens Advice recommends the following
Ask if they can offer you a cheaper deal. You can find their contact details on their website or on a letter from them.
You could tell your provider you’re thinking of switching to a cheaper deal with a different provider. Your provider might offer you a cheaper deal to get you to stay with them.
If you don’t want to stay with your current provider, find out if you’ll be charged an ‘exit fee’ to leave – check your contract or contact your provider. You’ll usually be charged an exit fee if you want to leave before the end of a fixed-term contract. This can be expensive, so it might be better to wait until your current contract ends.
You can check if you’ll be charged an exit fee to leave your mobile contract by texting the word ‘INFO’ to 85075. It’s free to text this number.
If you’re near the end of your contract, your provider should contact you to remind you. They’ll also let you know about their best available deals.
Commenting at the time, Rocio Concha, Which?’s director of policy and advocacy, said: “A good mobile connection is essential to everyday modern life and this merger between Vodafone and Three will have a significant impact on the telecoms market.
The CMA often blocks mergers between companies if they fear it could leave customers worse off.
Back in 2020, the government body put a halt to plans by JD Sports to buy rival Footasylum after finding it would reduce competition in the market.
The deal between Three and Vodafone could still go ahead, with the CMA set to publish a final report in December.
If approved, the tie-up will create a major rival to EE, which is owned by the BT Group, and currently serves over 30million UK customers with mobile services.
It comes as millions of customers have struggled to keep up with their monthly broadband and mobile payments amid the cost of living crisis.
Many providers introduce mid-contract price hikes, which means your monthly bill increases in line with inflation every April, plus an added percentage.
From January 15 next year, providers will be banned from doing this in percentage terms and will have to include an exact pounds and pence figure in your contract – but this will still mean customers have to pay extra.
Vodafone said in June that it would no longer apply these price hikes for consumers and some small businesses.
However, the change will only affect new customers of those renewing a contract with the telecom provider after this date.
For instance, customers who sign a contract in August 2024 will have their bills adjusted in April 2025 and then again in April 2026 by a predetermined amount.
Research, by Utility Warehouse, found that many customers are aware of these increases, but are choosing not to switch service providers.
It was discovered that those who don’t switch their contracts over lose an average of £28 a month, or £336 over 12 months.
Can I leave my contract if my prices go up?
Being met with price rises can be a stressful experience, especially if you are worried about your financial situation.
Most contracts come with terms and conditions that say your provider can increase the price each year – either by a set amount, or an amount linked to inflation.
If your terms and conditions don’t say your provider can increase the price each year, your provider should have given you 30 days’ notice before putting up the price of your deal.
You won’t be able to cancel without a fee if either:
- You signed up to the contract before 23 January 2014, or
- You were told at the start of the contract that the price would be going up, for example if you signed up for a 18 month contract but the first 3 months were at a discounted rate
- Your terms and conditions say your provider can put the price of your contract up each year
If you are moving house you should check if your provider offers the same service in your new area.
If they do, you might have to pay a small fee to move the service to your new address.