As a telecoms service provider the EC’s blocking of the merger of Three UK and O2 UK, has made me reflect on whether this decision is right for the industry. With the EC setting a precedent with the merger between BT and EE, initially it was considered that this merger would forge ahead, but that wasn’t so……
So what benefits did CK Hutchinson believe the merger would bring to the UK? The unlocking of £10bn of private sector investment in the UK’s digital infrastructure, addressing the country’s coverage issues, an enhancement of network capacity, speeds and price competition for consumers and businesses as well as dealing with the competition issues arising from the current significant imbalance in spectrum ownership between the UK’s MNO’s.
All these points sound positive and you wonder why the EC has made the decision they have – could removing an MNO from the market really have been so bad for competition and consumers? Surely competition creates innovation and improvements to coverage and prices? Even the Commissioner has stated that four isn’t an optimal number of service providers required in a given market, but the merger was blocked because Hutchinson’s takeover terms would have been bad for UK consumers and the mobile sector and would have hampered innovation and the development of network infrastructures in the UK.
From an O2 business customer perspective, there may have been a fear that customer service could have been compromised by the merger with the consumer focussed service provider, Three. But could Three’s experience of operating in the consumer market have brought benefits to O2’s business accounts? We will never know the answer to this question.
So what will the future have in store for O2? Rumours over the weekend seem to think there’s a possibility of an MBO with private equity investors approaching the CEO but whatever happens in the future, it’s probably going to be a while before we see any further merger talks between any of the major players and the role of the regulator Ofcom will need to keep pressuring service providers to improve customer service and coverage across the UK.
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