The Game of Thrones style merger-mania in the British telecoms industry is bad news for customers and could put up prices, the TalkTalk boss Dido Harding has warned.
Competition authorities in Brussels are currently poring over Hutchison Whampoa’s £10.3bn deal to buy O2 from Spain’s Telefonica and merge it with its Three mobile business. In the UK, the Competition and Markets Authority has closed its call for comments on BT’s £12.5bn swoop for EE ahead of a potential inquiry into the deal.
Asked whether competition was under threat because of the deals, Ms Harding said: “Yes, I think it is. Fundamentally, we are firm believers in the power of competition; it is what drives companies to invest and innovate and therefore a lot of consolidation is a bad thing.
“When incumbents tell you that mergers will be good for “market repair”, it is usually code for prices going up… What you’ve seen as the mobile and fixed-line sector has been consolidating in other countries [is that] prices have gone up. As a value-for-money provider, we see that a bad thing for customers.”
In response to the deal making, the UK telecoms watchdog Ofcom launched its first “overarching review” of the market in March, looking at competition. Its last review, in 2005, led to new rules giving competing providers access to BT’s network through the creation of Openreach – in order to offer phone and broadband services to consumers.
However, TalkTalk and other rivals are unhappy that Openreach remains a BT subsidiary and have called for it to be separated.
“We urge the respective regulatory bodies currently reviewing the various mergers and industry structure to put strong competition at the heart of their decisions,” Ms Harding said.
TalkTalk – whose TV business begins showing Game of Thrones next month – impressed the City with annual results, as its “quad-play” offer gains traction with price-conscious households. Fewer customers than ever are switching away as a result, she added.
The company, which has 4.3 million broadband customers, 1.4 million TV customers and 464,000 mobile users, generated its strongest-ever revenue growth in the three months to March, up 6 per cent. It now expects annual sales to grow at 5 per cent in 2017 and beyond.
Revenues rose 4.2 per cent to £1.8bn in the year to March, while underlying earnings were up 15 per cent at £245m.
TalkTalk shares jumped more than 5 per cent, or 20.9p, to 384.1p – a rise that benefited Ms Harding as she exercised options over more than 307,000 shares, pocketing more than £1.1m after selling them at 379p each. She still holds another 4.2 million shares, equal to a 0.45 per cent stake in the company.
Meanwhile, Telefonica’s O2 added a net 138,000 customers in the first three months of 2015 – a fourth successive quarter of growth that boosted its total customer base to 24.6 million.