Nearly one in three UK households are struggling to pay for their phone or internet service, the highest level on record. Yet prices keep going up: this year, mobile phone providers hit users with inflation-busting price hikes of more than 17%.
This will only get worse if regulators approve the merger of Vodafone and Three’s UK operations, a move that would make the new company Britain’s biggest mobile phone network. The slick media campaign promoting the deal says it would be “great for customers” and “great for the country”.
The evidence suggests otherwise. The deal would reduce the number of mobile networks from four to three, and the experience in country after country shows less competition between operators equals higher prices for their customers.
Analysis by Unite, part of an extensive research dossier we have produced on the deal, has found telecoms prices in countries with three mobile phone operators are 20% higher than those with four. Similarly, research by Prof Tommaso Valleti, a former chief competition economist at the European Commission, shows that the merger could lead to price hikes of £300 for every customer.
The deal is unlikely to bring the increased investment its backers claim. When Vodafone and Three merged with TPG in Australia in 2020, they claimed it would accelerate “the benefits of substantial network investments made by both companies”. The reality? Investment levels across the sector are down 45%, according to Unite’s analysis. The same wasn’t true for prices: within a year, some plans were hiked by up to A$40 (£21) a month.
Dividends paid out to shareholders jumped from £12m in the two years before the merger to £340m in the two years after.
When a merger reduced the number of mobile phone operators from four to three in Norway, corporate earnings doubled.
Let’s not forget that these payouts are likely to come on the back of job losses. Our research suggests the Vodafone-Three merger could cost up to 1,600 UK jobs – that’s on top of the 11,000 Vodafone is already slashing globally.
This will be just another example of the corporate “greedflation” driving the cost of living crisis. In February 2022, Vodafone’s then chief executive, Nick Read, was quoted as saying: “We feel the UK needs to consolidate to give [us] industrial scale so we can improve returns.”
For far too long, government and regulators have allowed corporations like these to shape this country to suit themselves.
Three is owned by CK Hutchison Group, a huge, sprawling Hong Kong-based conglomerate founded by the billionaire Li Ka-shing, one of the wealthiest people in the world. CK already makes huge profits from the UK, through a range of businesses including Superdrug, Northumbrian Water and Greene King. Its energy distribution company UK Power Networks is the largest in the country and has raked in an estimated £2.4bn in profits in the last four years, much of that paid out to CK in dividends.
Regulators have done little to intervene. CK and Vodafone will use their influence and access to government to push for the merger to be cleared.
We must make sure this doesn’t become yet another handout to shareholders at the UK public’s expense. That’s why Unite is campaigning against this merger. We need to bring this deal out of the backrooms and into the light. We are building a cross-party coalition in parliament and this will only grow in the coming weeks as the dangers of the merger become apparent. We will also be reaching out to consumer allies to support our campaign.
The regulator, the Competition and Market Authority, must step in to prevent this damaging merger and stop this endless cycle of greedflation. It’s time for government and regulators in this country to start serving the public, not the interests of profiteering corporations and their owners.
* Gail Cartmail is executive head of operations at the Unite trade union
