Could Vodafone and T-Mobile 'deal' push up call costs?
Vodafone is looking at buying T-Mobile UK, according to reports.
The Financial Times reports a deal to bring together the two mobile phone companies would create a firm with a 40 per cent market share.
Any deal would face regulatory hurdles and there would be major concerns over the effect of one firm having such a large market share.
Vodafone is refusing to comment on the story, as is T-Mobile.
Consumers are also likely to fear the effect on call prices and a narrowing of the choice of deals available.
Firms coming together may claim savings will be made through the merger and cutting areas where they overlap, but the longer-term concern for consumers would be costs.
The FT also reports T-Mobile's owner Deustche Telecom has hired JPMorgan to advice on the strategic options for the firm.
For the Competition Commission (CC) to step in to look at any merger, a referral would be needed from the Office of Fair Trading (OFT).
An OFT spokesperson explained the body would first be involved at the point of any deal being announced the watchdog being informed by the firms.
He stated the OFT looks at each market differently - so a 40 per cent market share may not in itself be a problem - but "there would have to a overarching reason" for consumer interest to be affected.
The mobile phone business has been struck by the recession, as consumers have been happy to sit back with older handsets rather than upgrade - with the exception of a few high profile models such as the Apple iPhone.
This has left mobile phone firms forced to focus on calls in a crowded and competitive market, and in turn to focus on consolidation.
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