Four into Three can't go: this mobile merger doesn't add up

Outlook

'The fine reflects the seriousness of the breach, given the potential impact on public health and safety,' Ofcom said (PA)

The squillionaire owner of Three, Canning Fok, has pledged to freeze the price of texts, voice minutes and megabytes for five years if his mobile carrier is allowed to buy O2.

But it’s a promise that, if you’ll forgive the pun, rings hollow. Mobile charges are falling anyway and have been for years; most companies now offer unlimited texts and calls anyway, so you can’t compare. Furthermore, there’s nothing in Mr Fok’s pledge to stop him ramping up prices ahead of his five-year freeze. Only last week Three told up to 1 million customers it was moving them off “legacy” tariffs and on to new ones that would double their monthly bills to £30.

Far more important than what Mr Fok did say in his open letter yesterday was what he didn’t. Namely, how can he rip up all the current network-sharing deals with his rivals and rearrange them without it either costing a fortune or disrupting customers?

The problem is this: to offer the widest coverage for the lowest cost, the four big phone companies currently share access to each other’s networks. Three has a deal to share with EE and O2 with Vodafone.

You can see the problem: if Three merges with O2, it will have to untangle O2’s sharing deal with Vodafone and its own partnership with EE. These deals are long-term and complicated, involving combined engineering and financing of mast towers and other infrastructure.

Untangling them would be potentially difficult in terms of engineering, and costly in time and money.

Having already formed the partnerships and won all those savings in time and investment, how can it possibly be in the industry or public’s interests to undo them all now and start again?

Along with Mr Fok’s price pledge yesterday, he also fired a broadside at the British regulator, Ofcom’s Sharon White, for wading into the argument this week about whether the deal should get the green or red light. After all, Mr Fok said, it’s not in her gift (European regulators are in charge), and she’s not heard his side of the story.

His bombast won’t scare her, though; the former Treasury brainbox isn’t the type to be bullied by a billionaire. Nor is her oppo in Europe whose decision it is, Margrethe Vestager. She is currently kicking Google’s backside over its non-existent Irish tax bill.

For Ms Vestager, the question is simple: when has a reduction from four to three suppliers ever been good for customers?

Sterling should be centre stage in the Brexit debate

All the wrangling around the Prime Minister’s “concessions” from Brussels is making the Brexit debate so dull that I doubt more than 5 per cent of the voting population cares any more.

People feel like they are being spun and taken for fools by big business, on the one hand, threatening thousands of job losses if we leave, and by the pro-Brexit media, on the other, ranting about our lost liberties.

One FTSE chieftain with significant businesses in the UK, continental Europe and beyond was almost choking on his Dover sole this week about the whole charade. Despite being an “in-er”, he was furious about the scare stories from his chief executive peers.

Anyone running a global business, he said, knows external investors won’t really care if we’re in or out. Likewise, no German mayor will say “nein” next time he offers to invest in their city just because Britain is not in the European Union.

Rather, this debate should be about what we believe is our role in the world: are we British and European, or just British? Would we be proud, or ashamed, to be the generation that undid our ties with our European neighbours?

The one issue about Brexit that will affect us more than anything, he said, is hardly being mentioned: the impact on the pound. The gyrations of sterling are far more material than minute details of red tape for employers or immigration.

A weak pound boosts the power of his overseas earnings when translated back home, and encourages more foreign visitors to his UK operations. But it depletes his investment war-chest for overseas expansion and increases his operating costs. A stronger pound reverses those variables. So, all he wants to know for his business is, will sterling rise or fall?

Yesterday, Goldman Sachs gave him its answer: the pound will crash by as much as 20 per cent if we leave.

Net, that would be positive for my lunch companion’s business – ironic given his personal aversion to Brexit. Equally ironic, for smaller businesses not exporting, which tend to be more Eurosceptic, a weak pound would increase their bills and raw material costs.

Perhaps it is time sterling, rather than the finer points of immigrants’ welfare payments, becomes central to this debate.

No cost cutting in evidence yet at Credit Suisse

Tidjane Thiam talks tough. A darling of the City when he ran the Pru, he’s now in charge at the troubled conglomerate Credit Suisse. Yesterday, while reporting terrifying losses, he declared he’d be slashing staff and bonuses. Thousands of those affected are in London. But look closely and you see overall pay leapt 20 per cent year on year and staff numbers rose 5 per cent in the last quarter of 2015. The average employee got £165,000. Mr Thiam has an Alp or two to climb before wages match reality.