An unhealthy mobile phone duopoly in the making?

Assuming the numbers quoted in the article are correct, Sure now has circa 55% of Guernsey’s mobile phone market and Airtel-Vodafone about 25%. So, Sure’s takeover of Airtel Vodafone will give Sure approximately 80% of Guernsey’s mobile phone market. I would describe that as near monopoly position. But, for now, let us just call it a duopoly.

Is a Sure/JT duopoly a good idea? I think not. Why?

1) It effectively removes the lowest cost operator.

2) Only three months’ ago, the Guernsey Press reported that Sure had been fined £2,962,632 for breaking competition law in Guernsey, whilst JT was fined £439,608. According to an ITV report dated 21 July 2022 ‘An investigation by the Guernsey Competition and Regulatory Authority (GCRA) in December 2021 found that Sure and JT had worked together to develop a plan that would mutually benefit them. The companies attempted to illegally control the provision of mobile networks in Guernsey, including the future introduction of 5G. Sure and JT had also shared information on their commercial strategy for introducing next generation mobile networks with each other’.

With regard to the proposed ‘merger’ Sure’s CEO Alistair Beak was quoted as ‘putting customers first’. But in amongst his promises to improve services there is little mention of services’ pricing. Mobile phone service charges are already high in Guernsey and a merged Sure/Airtel Vodafone with an 80% market share will more likely raise prices than cut them. No doubt JT would be happy to ride on Sure’s pricing coat-tails.

Thankfully, GCRA has a duty to review all takeovers and mergers ‘where there is a material reduction in the level of competition and [look at] the implications of that for consumers’ – but just how firmly would GCRA monitor and, if necessary, enforce action against Sure/Airtel Vodafone for any potential service delivery failures and/or future predatory pricing should this management or future managements row back on their promises to regulators and consumers? My experience is that management promises to regulators are often made as a trade-off for anti-competitive practices, but those same promises are later quietly forgotten by successor managements.

I hope, in these straightened times, Guernsey’s mobile phone users will not pay too high a price for this ‘merger’ of unequals; but permitting a single operator with an 80% market share does not bode well for consumers’ future choice and bank balances. Over to you GCRA.

ERIC BOYLE

GY1 1DY

Editor’s note: Alistair Beak, CEO of the Sure Group, responds:

Thank you for the opportunity to respond to this reader’s concerns. Our proposed agreement to acquire Airtel-Vodafone in the Channel Islands includes a number of promises to consumers and the regulators, including that we will continue to offer Airtel-Vodafone’s basic plan – which is currently the lowest-priced plan available in the market. We will also continue to offer market-leading unlimited data plans, which reflect the ever-increasing importance of data connectivity to mobile customers.

We believe that the proposed merger is an exciting development for the Channel Islands’ markets and one that will benefit customers as it will trigger significant investment in the islands’ mobile networks – specifically, an investment of up to £48m in a new, innovative mobile network which will include 5G services and improve coverage, value and reliability.

As your reader rightly points out, the proposed merger is subject to regulatory approval and cannot go ahead unless and until that is received.

Regarding the GCRA’s proposed penalty and investigation into Sure, we are steadfast in our belief that we have done nothing wrong; at all times Sure has acted in accordance with the spirit and letter of the law.

We are appealing through the Royal Court the flawed decision on which this fine is based and remain confident that we will clear the name of Sure and prove that there has been no wrongdoing.