- The two operators are reinforcing their message that the UK's 5G landscape will benefit if they merge
- An Opensignal report lends weight to the operators' claims that they will struggle without a merger
- A survey by the union Unite says Three customers care more about prices, not 5G
Three and Vodafone UK wasted few opportunities to reinforce their message that the nation’s 5G landscape will benefit considerably if the two operators are given the regulatory go-ahead to merge into a single entity.
Only last week, on the occasion of Three’s results presentation for the first six months of 2024, CEO Robert Finnegan said Three’s cashflows “have been negative since 2020 and our costs have almost doubled in five years, meaning investment in [the] network is unsustainable.” He also said UK mobile networks “rank an abysmal 22nd out of 25 in Europe on 5G speeds and availability, with the dysfunctional structure of the market denying us the ability to invest sustainably to fix this situation.”
Three is already being forced to scale back its capex to meet regulatory requirements, such as stripping out high-risk vendors from 5G networks and contributing toward the Shared Rural Network.
Finnegan repeated the mantra that Three’s merger with Vodafone “will unlock £11 billion worth of investment in digital infrastructure, creating a best-in-class 5G network for the UK and helping to grow the UK economy.”
Three has been struggling
A recent report from Opensignal, meanwhile, lends weight to Three and Vodafone’s claims that they will struggle to compete in the future without a merger.
Opensignal, which regularly produces reports on network experience and market performance around the world, said its data clearly shows that Three has been struggling competitively.
It specifically notes that Three has a small subscriber base and high competitive losses relative to its market share. In addition, more and more of its losses are going to MVNOs on its own network, including Three’s sub-brand Smarty.
“Three’s struggles are driven by a low subscriber base and high churn resulting from many factors including the halted expansion of its 5G network and pressure from both its own budget sub-brand and competitively from MVNOs such as iD Mobile that compete heavily on price and offer flexible contracts,” Opensignal remarked. “If these issues are not addressed they could lead to an even more precarious financial situation for Three, making it even harder for Three to resume 5G expansion if the merger were not to happen for some reason. This in turn could lead to even more Three customer churn as other providers have more capital to invest in their networks.”
Consumers will be 'asked to pay more'
On the other hand, the Competition and Markets Authority (CMA), in whose hands the merger approval lies, is concerned about the impact of the merger on consumers and prices. It is currently investigating the proposed transaction and has extended the deadline for its decision to December 7.
Moreover, the CMA has just published more comments that oppose the merger plan, including a poll conducted among 1,000 Three customers by the union Unite. According to Unite, the poll results show that customers are indeed more concerned about prices than 5G investments, and it said “all credible evidence suggests that UK consumers – and Three customers in particular – will be asked to pay more.”
The union further noted that there is precious little evidence that the merger will, as claimed, increase competition in the MVNO market to compensate for less competition between MNOs.
On that topic, the CMA additionally published a response from a “Company C,” which appears to be an unidentified MVNO. Company C states, among other things, that Three’s claim that it does not constitute a strong competitor in the supply of wholesale mobile services to MVNOs is “wholly inaccurate” and contrasts with Company C’s own experience of the market.
“Three remains a strong competitor in the U.K. and is relied upon by MVNOs to ensure that tenders for wholesale access services are sufficiently competitive,” the unidentified company added.