Three’s a crowd

IN MANY respects Britain’s mobile-phone market is one of the most successful in the world. About 30 operators compete for business, ensuring that prices are among the lowest for rich countries (see chart). A number of retailers offer an almost infinite variety of bundles of services, and coverage is relatively good too. All of which helps to explain why regulators in Britain and Europe are so opposed to a proposed £10.5-billion ($15.3-billion) merger between the second-largest operator, O2, owned by Spain’s Telefónica, and the fourth-largest, Three, owned by Hutchison Whampoa, based in Hong Kong.

On the face of it, such a deal would continue a long-standing trend towards consolidation among mobile operators, both in Britain and other rich countries. It is a mature market, and since 2008 revenues have generally been falling. It has thus made sense for companies to merge, freeing up capital for investment in costly infrastructure and new technology, such as speedy “4G” networks. In Britain, T-Mobile and Orange merged to create the biggest operator, EE, in 2010. EE, in turn, has been taken over by BT, the former state-run monopoly, in a £12.5-billion deal that creates a behemoth covering mobile, fixed-line phones, broadband and television.