Ofcom has revealed that it may be increasingly open-minded to mergers as the telecoms landscape continues to evolve and consumers look for better connectivity.
The regulator said it would review takeovers on benefits and pitfalls, as opposed to simply the number of competitors.
Ian West, Head of TMT at KPMG UK, commented: “The future of work depends on good quality connectivity and devices that rely on 5G technology will only reach their full potential – and deliver the most value – if they can operate at high speeds. Therefore, it is imperative for the UK to have world-leading networks to stay competitive.
“Ofcom’s new stance on mobile market consolidation is welcome. It will hopefully trigger a new wave of investment and deals to spur the evolution of 5G in the UK, so that our businesses can get the most out of innovative new technologies.”
The regulator notably opposed the proposed merger between O2 and Three back in 2015, which was then blocked by European regulators.
The European decision to ban the O2-Three merger was overturned by the EU’s General Court last year.
An interesting backdrop to Ofcom’s perceived change of heart is the ongoing talks about a mega-merger between UK giants Vodafone and Three UK
Nick Read, chief executive of Vodafone, recently said the UK was a “crowded marketplace” and needs consolidation to drive next generation 5G connectivity.
If the two firms were brought together, it would have 31 per cent of mobile subscribers in the UK, behind Virgin Media O2, with about 35 per cent, and EE, with about 34 per cent, based on Ofcom data for the first quarter of 2021.
Ofcom recognised that the mobile market is driven by the competition among four national mobile network operators (MNOs): BT’s EE, Vodafone, Three UK, and O2.
The watchdog also said there were currently no plans to introduce any new consumer pricing rules; but if new problems emerged that required further intervention, it would be ready to act.
“We expect that growth to continue, with more demand for data-hungry services. MNOs will continue to play a significant role, but we also expect to see an increased role for other companies in providing mobile networks and selling mobile services”, the Ofcom update said.