Three to Freeze Prices If O2 Deal Goes Ahead

February 5, 2016 - Written By Tom Dawson

In the US, customers have gotten used to the idea of the Big Four (that’s AT&T, Sprint, T-Mobile and Verizon) controlling the majority of the market. Across the pond in the UK however, there’s been a hell of a lot of change over the past five years or so. EE, the new network formed out of Orange and T-Mobile was the first to offer 4G LTE services a few years ago, and more recently the same network officially became part of BT. This now gives BT, the largest supplier of broadband in the UK the largest wireless network in the country. The deal was approved towards the end of last month, and EE became part of BT for a cool £12.5 Billion. Understandably, this sent waves throughout the market, and led Three to put in an offer for O2 (the network which used to be known as BT Cellnet back in the day). Now, Three is making promises to customers – and presumably regulators – should the deal go through.

Three UK is promising to freeze their prices for five years if the deal to purchase O2 is approved. The news came out in the Financial Times earlier this week, and it seems this is a move to reassure customers and the industry in one stroke. The deal is worth £10.3 Billion, and would see Three’s owner, CK Hutchison out of China, purchase O2 from Spain’s Telefonica and create a massive £15 Billion business. Three however, is known as the cheapest network in the UK, the only one to offer unlimited data and one of the few to take roaming charges seriously. Meanwhile, O2 – along with Vodafone – has been known to be one of the more expensive networks in the UK, and it’s likely this is why Three is making such a promise in the first place.

Three is promising to not raise the price of a “voice minute, a text or megabyte in the five years following the merger” and goes on to say that as Three is one of the smaller UK networks, the only way it can stand up to the new BT/EE giant is to merge with another well-established player. Regulators have set a dangerous precedent with the BT and EE deal, as that was not only worth more money, but posed a bigger threat to anti-competitive practices, so it will be interesting to see how they treat this latest deal in the coming weeks and months.