Three: We won't hike prices if you say yes to £10.5bn O2 merger

Three has promised it will not raise prices for customers if it is allowed to hop into bed with O2 in its proposed £10.5bn in an open letter hitting back at regulators' fears over the deal.

In the letter, Hong Kong-based CK Hutchison, which owns Three UK, promises it will not raise the price for consumers of a voice minute, a text or a megabyte in the five years following the merger – and that it will invest £5bn in the UK over that period.

It also said the new entity would enable "other meaningful competitors in the UK market to offer services on a completely level playing field."

The pledge follows comments by Ofcom head Sharon White that the regulator is not keen on the deal, and has concerns it will have a negative impact on consumers.

The European Commission is currently reviewing the deal and is expected to soon publish its "Statement of Objections” over the merger. It will make its final decision as to whether it should go ahead by April 22.

Canning Fok, head honcho at CK Hutchison Holdings, said: "We might be forgiven for wondering why Sharon White, the new CEO of Britain's telecom regulator Ofcom, felt the pressing need to go public with her conclusions about the effects of CK Hutchison’s proposed acquisition of O2 without having asked for or heard our views in response to her concerns."

He also added that the deal would allow the company to take on the new "the new Leviathan BT" following the conclusion of its merger with EE.

Kester Mann, principal analyst of operators at CCS Insight, said the letter represents an opening salvo "in what is likely to be long and intense period of negotiation with the European Commission."

He said: "The onus will fall on CK Hutchison to propose satisfactory remedies to allay the Commission’s concerns. Today’s announcement is the first step, but it is unlikely to appease competition chief Margrethe Vestager, who has adopted a hard-line on in-market mergers."

Ernest Doku, telecoms expert at uSwitch.com, was sceptical about Three's promise not to hike up prices, saying more detail was needed.

He said: "Reducing the UK mobile market to just three big players – one with a market share of more than 40 per cent – would restrict fluidity for bill payers, who can currently save up to £155 a year just by switching when their contracts are up for renewal.

“Even taking Hutchison's Three promises into account, there is a real risk this merger could stifle innovation and competition, reduce the incentive for networks to undercut each other, and lead to less innovative propositions." ®