UK mobile merger set for poor reception from users if prices rise

The proposed merger of two of the UK’s four mobile operators by Telefónica and Hutchison Whampoa raises the possibility of higher prices for the British phone user, sector experts warn.

British consumers have long benefited from some of the lowest prices for mobile tariffs in Europe. But the move announced on Friday by Li Ka-shing’s group to buy O2 from its Spanish owners, a £10.25bn deal that would create the UK’s biggest mobile group, could put that at risk. A key reason for the low prices has been the activities of Three, the smallest British mobile group, which has long set out its stall of being as challenging and disruptive to the “big three” of EE, Vodafone and O2 as possible. Three has kept its own prices low -- setting a benchmark for the market -- and given away 4G superfast mobile in “all you can eat” data bundles. The group has also campaigned to cut roaming costs for consumers, and lower the cost of connecting calls with the larger groups. Some analysts believe such activities are likely to come to a stop once Three is catapulted from the smallest to the largest mobile operator, with more than 40 percent of the market by subscriber numbers.