A record £2bn dividend payment to the owners of the telecoms firm Three sparked a row over the weekend as it was claimed that the huge payout showed that the company was profiteering and that its planned merger with Vodafone was “a clear attack on consumers”.
The Unite union said the dividend paid to the Hong Kong-listed conglomerate of the billionaire Li Ka-shing, which owns Three, revealed that the firm was highly profitable as an independent business and could remain viable without a merger.
If the merger is given the green light by UK regulators, competition will mainly be between Virgin Media O2, EE/BT and Vodafone/Three.
Hutchison 3G, which trades as Three and has 10 million customers and more than 4,500 employees in the UK, said the dividend payment followed the £10bn sale to Cellnex of mobile phone masts across Europe, which included 6,600 UK assets. The agreement with Cellnex was a one-time transaction that sold off the passive infrastructure of Three sites on which it now pays rent.
A spokesperson added that it had also invested heavily in the UK business and the rollout of 5G mobile technology for its customers. It is the first dividend payment by the company.
However, Unite said the dividend payment, shown in the company’s latest accounts, was made months before Three increased some of its contract prices by 14%.
With fewer competitors, the increase in prices might have been even higher, the union said.
The British company is owned by 95-year-old Li’s CK Hutchison Holdings, which has come under fire in the past for dividends taken from its other UK assets, including £2bn of dividends from the electricity distribution business UK Power Networks.
In 2016, the Competition and Markets Authority (CMA) and the European Commission blocked Three’s attempted takeover of O2, which would have left just three major networks, saying it would have risked higher prices. The two companies had attempted to allay concerns by assuring regulators they would freeze prices for UK consumers for five years.
Hutchison 3G has pledged to increase investment as part of its latest merger scheme, which would allow Li to cash out of a business he launched 20 years ago.
The deal is likely to be scrutinised by the CMA, although last year the UK telecoms regulator, Ofcom, changed its long-held stance, saying it was now more open to consolidation in the sector. It had previously argued that dropping to only three networks could harm consumers.
Unite’s spokesperson, Sarah Carpenter, said: “The siphoning of record dividends from Three while crying ‘failing firm’ to push through the harmful Vodafone merger is nothing short of cynical exploitation.”
Unions fear higher charges will be followed by huge job losses if the merger is waved through.
“This deal is a clear attack on consumers, threatening a staggering £350 hike in yearly mobile bills and putting 2,500 jobs on the line, while making hollow promises about future investments,” Carpenter said.
“On top of that, entrusting vital blue light [emergency services] contracts to a Chinese state-influenced company raises alarming national security concerns. Unite continues to stand firm against this merger, fighting to protect the interests of workers, consumers and the broader public.”
