Hutchison will float O2 … as soon as the Three merger is done CK Hutchison - once known as Hutchison Whampoa* - will float O2 when it merges with Three, pushing the company back into public ownership. The merger is still awaiting regulatory approval, but is expected to go ahead. The fallout will see the number of mobile operators in the UK dropping from four to three, although given the …
"In order to maintain competition and consumer choice, will OFGEM invite bids from MVNOs to become the 4th MNO?"
Using what spectrum? The licences stay with the companies into the merger.
I'm not all that sure that the electricity regulator has much interest in cellular telephony.
The UK telecoms market is driven primarily on price. A side-effect of that is that there's not much money in it for businesses and so the owners and investors look to get out as soon as growth stops, which is why O2 and EE are for sale, and why T-Mobile and Orange merged to form EE in the first place. It's also why there are far fewer ISPs than there used to be. The only way to make money in UK telecoms is from scale, hence the mergers.
Consumers don't make their decisions based on broadband speed or network coverage or service reliability or customer service - just price - and so the only winning business strategy is to cut costs and prices continually which eventually leads to business failure or merger.
"Consumers don't make their decisions based on broadband speed or network coverage or service reliability or customer service - just price ..."
I would like to have the option to buy my mobile services based on these things (well, except broadband speed - generally pointless on a mobile device), but the race-to-the-bottom denies it to me. Where is the company that will give me good coverage, especially at home, AND good customer service (that being said, I'm one of the people who is very happy with Orange/EE customer service)?
However, I think you are wrong about network coverage, because if that were true all the mobile companies have to do is have coverage in one town* in the country, and everyone in the rest of the country would still have a mobile.
*I know - it does seem that London is that town, and the rest of us only get coverage when the wind is blowing in the right direction.
I presumed that the merger would create a single brand; O3.
Bringing together the concept of O3 and their many notspots, there's a better brand name: nOzone
It's even got the w@nky illiterate capitalisation that tells investors "this is a tech sector company", in the same way that random punctuation does. Maybe they could double down and call it nO:Zone
That's have the secondary capital markets gushing to throw money at Cheung Kong.
There's already very little competition between the big 4 as it is. This will just make it worse.
They are all making a massive killing on 24 month contracts where the price of the handset and comparable 24 month sim only deal is marked up between £100 and £200. That's not taking in to account the massive discount the networks get for bulk purchase of handsets.
Rip-off Britain strikes again!
"There's already very little competition between the big 4 as it is. This will just make it worse."
Actually the competition is intense - prices are cut to the bone and no-one's making much money, which is why the networks are/were up for sale in the first place.
That £100-£200 'profit' for two year's service has to pay for the rollout and maintenance of the network providing the service, wages for staff, all that stuff - I doubt they're making £10 a year from you after that's taken into consideration.
Businesses that are making a killing don't get sold by their owners. Owners like profitable businesses. The don't like businesses that require hefty ongoing capital investment just to stay in the game when the revenue per user is in decline.
>I like the o2 brand and would be sad to disappear
I suspect Three are primarily after the infrastructure and spectrum. However the O2 brand has value and hence can potentially be sold, along with the existing customer-base as a viable MNVO operating over Three's network - this would enable Three to tick the "open for MNVO business" box for the UK, remember the EU required Three (Ireland) to support MNVO's on their network when they took over O2-IRL.
As a previous Three customer, I would welcome the merging of O2 and Three, if it fills some of the not-spots... I just always found O2 expensive, Three was always good value, and good service IF there was a signal, the only downside being the Indian call centres made customer service a nightmare....
As a Three customer I don't like the idea of this, I use both networks, Three for personal use and O2 for work. I'd take Three any day and the not-spots people talk of are few and far between. You might get always get a signal from O2 but it's rarely 3G especially in rural areas and when you do get one it's slow!
Yes. This.
EE aint too bad on their 4G, but 2G/3G is horribly iffy when moving between transmitters as hidden in the background, your poor phone is trying to flit between Orange and T-Mobile transmitters effectively roaming. I suspect the outcome of the Three/O2 merger will have the same result.
This will result in the UK having two mongrel networks + one thoroughbred, Vodafone. Sadly, that thoroughbred only barks to the tune of 2G outside cities and large towns at the moment, so we're f*cked.
Who needs 2G fallback anyway? It's only value is in keeping the implementation costs down - there is no technical reason why you can't have 3G / 4G coverage in every area that you can get 2G, and from a user perspective no reason why you would want it over having 3G / 4G.
Three's main issue is that they mostly operate in high-frequency spectrum, so the indoor coverage is not as good. But it's possible to implement 3G over lower frequencies, if you have the spectrum.
"Consumers don't make their decisions based on broadband speed or network coverage or service reliability or customer service - just price - and so the only winning business strategy is to cut costs and prices"
No, they don't, that's quite patently obvious with just a cursory glance at what is available on the market and the number of customers with each supplier. Only some people decide purely on price.
It is true that there are an unhealthy number of business people who believe this rubbish and end up destroying perfectly healthy businesses in the pursuit of the lowest prices.
... that Three isn't considered to be the brand in trouble. After all, it still has something of a troubled reputation, but more importantly it was called Three at a time when it's USP was that they were rolling out a 3G only network. Now they are moving into 4G, Three as a brand makes less sense.
It makes no sense to me as to why Hutchison want to buy O2 UK. The cost of acquiring O2 plus breaking up the mast sharing deal with Vodafone and 3's mast share with EE as well as restructuring would be prohibitively expensive and I don't see them ever making a profit from this.
It also makes no commerical sense to keep both O2 and 3 seperate, yes its good to have more than one brand, but that's not the issue here, running two businesses on two different platforms and infrastructures would be very expensive.
It would make perfect sense for Vodafone to acquire O2, it would put Vodafone back to market leader. Yes, there would be questions about competition, but its way better than Hutchison's idea. Also why would Vodafone taking over O2 be such a problem with competition when they allowed Orange and T-Mobile to merge.
The spectrum released for Virgin Media or Sky would not be big enough to provide an efficient service, the 3 network is still patchy. This means the new entrant would never be as successful or even able to compete with EE or Vodafone, it would be a disaster and this is only Hutchison's attempt at lobbying.
It is unlikely to go through and it is likely we will see new owners of both O2 and 3.
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