3 Networks Set To Increase User Numbers Following Termination Rate Cuts

The CEO of 3 Networks, Kevin Russell, has announced that the smallest independent mobile phone network in the UK would start to "aggressively" increase its customer base following the announcement by the Ofcom of cuts to the termination rates.

As reported a few days ago, Ofcom has ordered that the rates be slashed from the current 4.3p per minute to a mere 0.5p per minute over the next five years, a move that 3 Networks reckon will save customers millions.

The Hutchinson Whampoa subsidiary had previously pledged to bring the price of unlimited calls and data packages to around £35 and, together with BT, had launched a "terminate the rate" campaign which has attracted more than 100,000 supporters in just five months.

But some experts say that the move by Ofcom to reduce the MTR could impact negatively on current mobile deals as the other mobile phone operators increase costs elsewhere to outweigh the lost revenues.

Commenting on the matter, the CEO Of O2, Matthew Key, said that "Ofcom is moving one of the key elements in the equation and we can’t just sit by and let this happen. Clearly, we need to change our business model to do something to compensate".

With T-Mobile expected to complete its merger with Orange in the forthcoming months, the Ofcom decision may give Three a new lease of life and allow it to produce a profit for the first time ever.

Our Comments

One can argue whether the decision by Ofcom to cut the MTR may not have a negative impact in the long run for customers. The three remaining mobile phone operators may soon want to look for other sources of revenues.

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