Three launches £5 a month 'granny tariff' for pensioners in bid to get regulators to approve merger with O2

Mobile operator Three is set to launch a special tariff for pensioners in a bid to get regulators to approve a merger deal with O2.

The company has revealed it will offer 'all-you-can-eat' calls and texts bundles to over-65s for £5 per month.

The tariffs would be available for any handset and it says they are the first of their kind to benefit pensioners exclusively.

Over 65s tend to find themselves paying for internet services unnecessarily on their mobile phone deals – when many use their phones solely for calls and texts. 

Pensioners tariff: Three will offer 'all-you-can-eat' calls and texts bundles to over-65s for £5 per month

While other providers such as BT offer cheaper packages for those just making calls via a landline, it appears to be the first mobile contract of its kind.

The move is the latest attempt by Three to convince regulators to wave through its £10.5billion takeover of rival operator O2.

But as no date has been given as to when it will become available, it's unclear if it will go ahead if the merger is not approved. 

The European Commission is investigating the proposed tie-up over concerns it would reduce competition for customers.

If it goes ahead it's feared it would drive up prices because it would take the number of operators from four down to three in the UK.

Those who use their mobiles infrequently – usually the elderly – are thought to be most at risk of rising bills, Sharon White, Ofcom's chief executive, warned at the start of the year.

The deal for Three's owner CK Hutchison to take over Telefonica's O2 is currently being scrutinised by competition regulators at the European Commission in Brussels.

During the negotiations, Hutchinson has put forward three 'promises' to allay fears of increased competition and rising prices.

It said it will not raise prices for consumers for five years following the merger, it will invest £5 billion in the UK business during the same time period, and it will sell 'slices' of its network to other mobile competitors.

Canning Fok, group co-managing director for CK Hutchinson, said in a statement: 'This is not an aspiration. It is a guarantee. Over the coming weeks the promises I have laid out will be an important part of the case Three will put to Europe's competition authorities, who have had the wisdom not to rush to judgment until, as the law requires, they have heard our response to their concerns.'

It's feared the merger will drive up prices for UK consumers, especially those who use their phone mainly for calls and texts

However, reports of price hikes after a recent telecoms merger in Austria have also sparked concerns that if the deal were to go ahead prices would increase for UK consumers.

Austria's telecoms regulator said since a similar deal there, between Hutchison 3G Austria and Orange Austria, overall mobile prices have gone up 15 per cent, and 30 per cent for those who only make calls and send texts.

The report also says that while the merger was approved in December 2012, since 2015, a number of MVNOs have entered the market which have seen prices fall.

In a statement it said: 'Nevertheless it can be observed that some retail prices are still above the level before the merger.

If the merger is confirmed between Three and O2 there will only be three mobile networks in the UK

'Furthermore, it is uncertain how sustainable competition from MVNOs will be in the long run. The authorities will therefore continue to monitor the market for mobile telecommunication services.'

Several consumer groups have also spoken out against the merger. 

Ernest Doku, telecoms expert at uSwitch.com, said: 'Reducing the UK mobile market to just three big players – one with a market share of more than 40 per cent – would restrict fluidity for bill payers, who can currently save up to £155 a year just by switching when their contracts are up for renewal.

'There is a real risk this merger could stifle innovation and competition, reduce the incentive for networks to undercut each other, and lead to less innovative propositions. 

'In an ideal world, customers would reap the benefits of both networks. O2 users might get Three's roaming perks while O2 could boost Three's customer experience, for example. 

'But this has not been promised and it isn't an ideal world. When Orange and T-Mobile merged, we saw the loss of T-Mobile's unlimited data deals. This spelled the demise of all-you-can-eat data from a number of other providers, leaving UK mobile customers with fewer options.

'Hutchison committing to an MVNO with a dedicated portion of its spectrum seems the only promise that really tries to address long-term competition concerns, but it remains to be seen if this will really be enough to get the green light.'

The European Commission is expected to make its decision in May.