Dixons Carphone to launch own mobile network on Three

Dixons Carphone is set to add to the enormous turmoil in the UK mobile market by launching its own virtual network. The retailer plans to piggyback on the Three network and offer a range of flexible contracts to differentiate itself from the growing competition. 

The as yet unnamed Dixons mobile network is set to be launched in the summer and will allow customers to easily switch tariffs if they find that their current deal doesn’t match their usage. “We will have something different from what is available elsewhere in the market with a more personalised service for the mobile customer that will let them tailor their price, minutes and data to their changing needs,” said the company’s Graham Stapleton in an interview with the Financial Times. 

Given that phones are often subsidised based on the cost of the contract, it seems likely Dixons will offer something similar to O2, where the cost of the handset and the airtime contract are separated, allowing customers to switch contracts without affecting the phone repayments.

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The deal comes at a time of extraordinary turbulence in the UK mobile market. Three is in the process of acquiring rival O2 in a deal reported to be worth £10 billion.  Meanwhile, BT is putting the finishing touches to a £12 billion deal to buy EE – although both potential takeovers will likely need the green light from regulators before they can be completed. 

Sky, meanwhile, last week signed a deal with O2 to launch its own virtual mobile network in 2016 – that despite O2 still being in the middle of takeover talks with Three. The deal means Sky joins BT, Virgin and TalkTalk as the country’s so-called quad-play providers, offering broadband, landline, mobile and television services to customers in one bundled deal. 

Despite Dixons and Sky entering the market, the UK will still only be left with three UK mobile networks if all of these takeovers are completed, raising concerns about the lack of competition at the primary network level. The biggest loser is likely to be the government, which will struggle to generate any meaningful competition in future auctions for radio spectrum, something which has added tens of billions to the treasury coffers in the past.

The UK mobile market 2015 

(How the market will look if all planned takeovers are completed)

1. Three/O2

Virtual networks based on Three/02 include: Tesco Mobile, giffgaff, Sky, Dixons Carphone

2. BT/EE

Virtual networks based on BT/EE include: Virgin Mobile, Asda Mobile, Utility Warehouse

3. Vodafone

Virtual networks based on Vodafone include: TalkTalk Mobile, Mobile by Sainsbury’s, Truphone