02 April 2016 ~ 5 Comments

Tesco buying back Tesco Mobile shares

tesco mobile phone

Tesco Mobile is on the move onwards and upwards. The supermarket chain has just announced aggressive plans to grow its mobile market share in the UK through a planned buy-out of its current joint venture with O2 while securing new agreements with Hutchison (Three Mobile) to give it increased access to the most profitable side of the UK mobile market.

Tesco currently has about 4.5 million customers and operates as a virtual network utilizing O2’s resources. It uses O2’s cellular towers and does not need to worry about having its own network infrastructure. This gives it access to O2’s 70% 4G coverage of the UK market.

Hutchison’s proposed £10.25bn takeover of O2 will see a change in the mobile market in the UK as Hutchison will then be in control of both the 3 and the O2 networks. Although the figures probably pale in comparison, Tesco is determined to grow its share of this market to provide an alternative profit stream to the tough grocery market. Meanwhile, Three Mobile will welcome Tesco’s plans since they will help counter the opposition it has received from the competition watchdogs regarding the impact of the acquisition on the UK mobile market.

Sharon White, head of the communications regulator Ofcom, voiced her opposition to the deal last October and in a recent letter to the Financial Times stated that “a combination of Three and O2, creating a new market leader and reducing the number of UK networks from four to three, would damage competition and leave consumers poorer ”.

The Telegraph has reported that: “Tesco is an interested party in the merger review process. It is important that any landscape created by the merger process allows challenger brands, such as Tesco Mobile, to deliver the best possible services for UK customers, and champions consumer choice.”

Tesco has had a 50:50 joint venture with O2 for thirteen years and is planning to buy back a portion of Tesco Mobile shares which O2 owns. It is rumoured that such a deal could cost Tesco up to £300 million. At the same time, the supermarket wants to secure a long-term deal with Three Mobile for capacity in the new network after the merge with O2. Tesco’s intention to build its mobile base is a radical about-turn for Tesco CEO Dave Lewis who last year announced his intention to sell off Tesco Mobile to reduce its £22bn debt.

We wait to see how this development will impact users. Will it mean increased costs or increased value? What do you think?

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04 November 2015 ~ 0 Comments

MVNOs top customer service poll

customer service poll

A recent poll has shown that customers massively prefer smaller virtual mobile networks to the main players. The recent study asked users to rate the customer service and showed that industry veterans such as Vodafone and EE motivated the worst mobile networks in the UK while smaller organisations such as Giffgaff, Tesco Mobile and ASDA Mobile headed the pack.

The poll was carried out by moneysavingexpert.com and asked 10,620 users to rate their mobile provider’s customer service on a scale from “great” through “okay” to “poor”. The network that topped the table was Giffgaff scoring 65% “great responses” with only 5% of their users rating customer service as “poor”. Close behind in second, was Tesco Mobile with an impressive satisfaction rating of 63%. Third placed was ASDA Mobile and coming fourth was Virgin Mobile. It’s worth noting that all of these networks are MVNOs that actually run using other networks’ infrastructure.

Meanwhile, lingering down in last place was Vodafone scoring “great” in only 20% of responses. Perhaps worse was the fact that 28% of their customers rated the service as “poor”. Barely escaping the booby prize was it EE (including its Orange and T-Mobile brands) which shockingly only was scored “great” by 22% of their users.

The other two main mobile networks are Three and O2, who had to be satisfied with mid-table mediocrity being rated great by 40% and 33% of their userbase respectively. Both had relatively high numbers of “poor” verdicts with 12% of their users giving them the lowest grade.

The poll was especially surprising since MVNOs were evaluated so well. For example, ASDA Mobile actually run’s on EE’s backbone yet their “great” score was 54% vs 22% and only 14% of users decided their service was “poor” compared to 24% for EE.

Analysing the results, it should be clear that you don’t have to go with a big name to get great customer service. And just because you’re paying more with a major network, doesn’t mean you should expect to get a superior experience. ASDA Mobile has always been marketed as a budget network yet they completely outperformed their host network, EE, despite using the same infrastructure. Here’s the results in full:

Rank Network Great OK Poor
1 Giffgaff 65% 30% 5%
2 Tesco Mobile 63% 33% 4%
3 ASDA Mobile 54% 31% 14%
4 Virgin Mobile 42% 44% 14%
5 Three 40% 48% 12%
6 O2 33% 55% 12%
7 BT Mobile 36% 43% 21%
8 Talk Mobile 31% 50% 19%
9 EE 22% 54% 24%
10 Vodafone 20% 52% 28%

If you’re not satisfied by your network’s service no matter what their ranking in the table above, remember it’s really easy to switch mobile network. And you can even keep your same number too. We always recommend going for PAYG or SIM-only deals because they are better value for money and you’re not locked in to a network you hate for years at a time.

Where did your current mobile network come in this consumer satisfaction poll? Do you think it’s a fair rating or do you disagree with the judgement? And which network would you switch to if you could?

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28 January 2015 ~ 6 Comments

O2 acquired by Three Mobile

three o2 merger

Hutchinson Whampoa has been in talks to buy O2 for the last few weeks. It has been said by industry experts that the asking price is going to be about £9 billion. Some insiders have expressed surprise at the fact the smallest network in the UK is going to buy O2 who were whether pioneers of mobile telephony since its inception.

However, Telefonica – the owners of O2, are laden with outrageous amounts of debt and recently have been struggling as they are increasingly-desperate to raise some liquid funds. O2 currently has about twenty three million customers and the deal, if and when it’s completed, would be the largest consolidation merger in europe.

It has being an open secret in the industry that Telefonica have been trying to sell the UK branch of O2. The deal makes even more sense as it would give Three a much needed 2G capacity and also combine both networks’ 800 2 has traditionally struggled with having the capable and widespread 3G and 4G network and by combining his resources with Three hopefully will be up to provide this in the future.

Recently, there’s also been another massive acquisition in the mobile network market in the UK. The country’s biggest mobile operator, EE, is going to be purchased by BT in a £12.5 billion deal. This additional pressure on their rivals has probably led to this merger as it will be beneficial and allow better competition with the new mega network that would be formed. Indeed, analysts find it completely unsurprising in light of the new BT/EE partnership which would hold a combined share of over a third of the consumer mobile market.

There are risks that consolidating the amount of options available to the general public will result in decreased competition and as a result prices could rise. Additionally, Hutchison Whampoa owner Li Ka-Shing has a personal wealth of over £25 billion as well as a humongous property empire – it remains to be seen how committed he is to providing a quality service rather than simply making a return on his investments. It’s easy to argue that fewer players in the telecoms market is unlikely to be a positive development for consumers.

However, the poor quality and speed of O2‘s data network has been a bane for users for several years now. In comparison, Three has one of the best mobile data services available and also is much more generous with its bandwidth allowances.

Currently, Three only has a few very small virtual networks hosted such as Shebang and VWF. In comparison, O2 provides infrastructure for large offering such as Giffgaff, Tesco, Lyca and GT Mobile so the increase in MVNOs under the Three umbrella could be a positive development for their users. Having said that, it remains to be seen whether Three will have the same opinions about these virtual networks especially seeing as Giffgaff alone has trading losses of about £70 million since its inception (although it has become more profitable in recent trading years).

The deal has only been confirmed recently (subject to standard due diligence processes), but it has been announced that the total payment will be over £10 billion including initial an initial injection of more than £9 billion in liquid cash. Once finalised, the merger will create the UK’s biggest mobile network with almost 50% share of the market. At the moment, it doesn’t seem like there’s any resistance from the regulator, so it’s very likely that it will eventually go through.

So O2 have finally been bought out after finding a serious buyer. What’s your thoughts on the merger? Are you a customer of Three or O2? What is in the future is for existing customers of both networks and do you think you’ll be a positive or negative outcome? Please let us know your thoughts and the comments below 🙂

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