Colao slams Hutch price freeze pledge

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Vodafone Group CEO questions wording of Three-owner’s promise to freeze prices if O2 takeover is approved

Vittorio Colao has hit out at CK Hutchison’s promise to freeze prices if the European Commission approves its £10.25 billion bid to buy O2.

In a letter released yesterday (February 4), CK Hutchison Group-co-managing director and chairman of Three UK Canning Fok set out three promises: a five-year price freeze on minutes, texts and megabytes; a £5 billion investment int he combined network; to offer competitors “meaningful” help to compete on a “level playing field”.

Canning Fok
CK Hutchison Group co-managing directo Canning Fok

Speaking on a media call following Vodafone’s latest financial results, the Vodafone Group CEO questioned the wording in Fok’s letter, saying it was “interesting”.

Answering a question asked by Mobile News, Colao said: “Price freeze? I wish I had a price freeze myself because what we’ve seen in the last year is the price for minutes, SMS and per GB is actually going down.

“The way it was worded in the letter was interesting because no-one is actually increasing their prices – customers are getting more and more every year. Are we talking about unit prices? Because I don’t think it is a great guarantee.

“Are we talking about ARPU? Everybody is giving much more minutes and data at marginally higher prices. Where you could get 1GB for £35, now you can get 4GB for £40, so I’m not sure what this price freeze means.

“It seems to me the letter from Hutch was saying ‘we want to do this merger and we will consider how to make it happen’ but specifically I didn’t learn a lot from the letter.”

Ofcom

Fok’s letter came after the Financial Times ran an article written by Ofcom chief Sharon White saying she opposed the deal.

In her article, White also expressed concerns over which network a combined O2/Three would run on in the UK.

Currently, O2 has a network sharing agreement with Vodafone, while Three has a similar deal with EE, which is now owned by BT.

Ofcom chief executive Sharon White
Ofcom chief executive Sharon White

Colao said he agreed with White’s claim that a combined O2/Three running off EE’s network could create an unfair market.

Colao added: “With Sharon White, I think she was pretty clear and touched on a point that Hutch didn’t mention. There are two different networks competing in the UK – O2/Vodafone and EE/Three. If O2 and Three go together, they need to decide where to go.

“If they join with a BT/EE they will create a huge monopoly, so they should come into ours. How they can think of sitting on two networks and seeing strategic plans from two competitors is a bit unclear for me. I am aligned with Sharon White’s letter on this.

“BT controls the vast majority of fixed lines in this country through Openreach, and EE is the leader in the market. If you allow O3 (sic), which is going to be a huge player to go again on the same network, you create a concentration of network power which I don’t think will be healthy.”

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