What mobile network mergers mean for UK consumers

Communications watchdog Ofcom has opened the door to future mergers between mobile networks in the UK amid growing consolidation in the market.

The regulator, pivoting from its long-held belief that a merger between any of the UK’s mobile firms should be blocked at all costs, explained it is not proposing new regulatory interventions in mobile markets at this stage, but is "ready to engage and take action where necessary".

"We are clarifying our position on mobile consolidation," Ofcom added, noting its stance would be informed "by the specific circumstances" of any proposed merger, “taking into account how markets are evolving”.

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As Ofcom's move opens the door to mergers between the UK's big four mobile network operators, but what does this mean for consumers?

Price hikes

As the mobile model has evolved to include faster broadband such as 5G, mobile companies that merge may need to pour extra money into infrastructure to deliver such services.

This means consumers' phone bills may rise as it could "shift the balance of power" in the market.

Former Ofcom chief, and current chair of John Lewis Partnerships, Dame Sharon White was staunchly opposed to Three UK's attempted takeover of O2, which was blocked by the watchdog in 2016.

"Competition is the lifeblood of today’s telecoms market, spurring innovation, better coverage and fair prices," she said at the time. "The deal could mean higher prices for consumers and businesses."

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Limited competition

If phone companies consolidate consumers would not only be left paying higher bills but their choices might also be limited.

Currently consumers in the UK have a choice of four mobile network operators in the UK: EE, O2, Three UK and Vodafone (VOD.L).

Ofcom has previously explicitly stated in its annual plans that the UK market needs four leading mobile players to operate efficiently.

However, the regulator softened its opposition on Wednesday, saying: "Our stance on a potential merger would be informed by the specific circumstances of that particular merger, rather than just the number of competitors."

Robert Finnegan, CEO of Three UK, said: "Moving from four to three mobile players in the UK would mean better, smarter investment in the networks which would, in turn, improve the quality and scale of connectivity in Britain and would unleash more competition.

Finnegan added that ultimately this would mean users and businesses would "benefit from more choice and better deals".

Better value for money

It is not all bad news for consumers however. Consolidation could mean better services and spur greater investment in mobile technology which could lead to a better user satisfaction and value for money.

The UK has one of the highest internet usage levels in the world. Nearly the entire nation has access to the web, with an estimated 62.86 million monthly users in 2021 alone – expected to rise to more than 65 million users per month in 2026.

In 2010 the UK merger between operators T-Mobile and Orange to create EE was the catalyst for the nationwide roll-out of 4G.

The merger at the time forced other players to follow suit and every UK consumer felt the benefits, regardless of their network provider

Such investment encourages all networks to innovate, both in terms of services and the kinds of new devices customers have come to expect.

"Britain's mobile market needed consolidation as its infrastructure was "subpar" compared with many other nations," Finnegan said.

"As things stand, the UK does not have the quality of mobile infrastructure it deserves,” he added. "Investment is spread too thinly across too many players, meaning our networks are subpar by international standards."

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