UK operators feel heat after £400M price hikes

UK mobile operators could face regulatory scrutiny after a consultancy investigating corporate wrongdoing reportedly urged action over hikes in mobile contracts which have put consumers on the hook to pay an extra £400 million per year.

Fideres Partners, which compiles research for regulators, solicitors and campaign groups, produced a report seen by Bloomberg which found a recent succession of price hikes by Vodafone UK, EE, 3 UK and O2 UK to be uncompetitive.

The consultancy sent its findings to Ofcom and the Competition and Markets Authority urging a probe, noting it was more difficult for UK consumers to terminate contracts early compared with other nations.

O2’s price rise, which equates to a 3.9 per cent increase, will go into effect from 2022, while the other three operators have increased their tariffs by 4.5 per cent since September 2020.

In total, the increases mean consumers have to pay an additional £400 million per year, with the four operators representing 87 per cent of the market, Fideres Partners found.

Profits squeezed
Price increases in the UK comes as the market faces a squeeze on profits, with operators facing up to the costly task of replacing Chinese vendor Huawei’s network equipment following a government ban. [1]

Proposed mergers in the market have also not been overly successful, with O2 blocked from merging with 3 UK in 2016 due to concerns over price rises.

O2 has since merged [2] with Liberty Global to boost its convergence offering, and Fideres Partners added an examination of the joint company’s future pricing strategy should be considered.

Notably, Bloomberg added the report found no evidence the four operators colluded on the price increases.

[1] https://www.mobileworldlive.com/featured-content/home-banner/rivals-circle-as-huawei-thrown-out-of-uk-5g
[2] https://www.mobileworldlive.com/featured-content/home-banner/telefonica-liberty-global-uk-merger

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