Mobile shares hit by clampdown fear

Shares in the UK's mobile phone operators took a bashing yesterday as fears mounted that the Competition Commission is preparing to clamp down on the costs of calls to mobile phones.

The authority, which has spent a year looking into the issue after it was referred by the telecoms regulator Oftel, is calling for a one-off price cut of 15 per cent combined with a cut of retail price inflation minus 14 per cent.

The measures, which could be announced as early as next Wednesday, are tougher than the original proposal put forward by Oftel. It had suggested a cut of retail price inflation minus 12 per cent a year for the next four years in a move designed to save consumers £800m.

Vodafone, Orange, mmO2, formerly known as BT Cellnet, and Deutsche Telekom-owned T-Mobile are all thought to be considering the possibility of pushing for a judicial review.

Shares in mmO2 were most affected, closing down 5.0 per cent at 48p, making it the third-biggest faller in the FTSE 100, as analysts calculated it would be hardest hit by the move. Vodafone fell 3.6 per cent to 119p while Orange dropped 10p to 505.5p.

"MmO2 is the most heavily exposed to the decision. It derives 72.9 per cent of its value from the UK business whilst the UK contributes 31.7 per cent of value at Orange and only 12.5 per cent at Vodafone," analysts at Bear Stearns said.