(Bloomberg) -- U.K. phone carriers haven’t raised prices enough to keep step with a surge in inflation, the latest cost that tough competition is preventing them from fully passing on.
Since Britons voted to leave the European Union in 2016, the U.K. has seen the consumer price index rise to a four-year high, but carriers’ average revenue per user has slipped in real terms. Although data consumption is set to keep ballooning, U.K. operators are having to fight harder on price to retain customers amid the end of lucrative European roaming charges, longer handset lifecycles and cutthroat four-way competition.
The major U.K. carriers are still offering more bountiful contracts, including all-you-can-eat data bundles such as the ‘Go Binge’ package from challenger brand Three UK, owned by CK Hutchison Holdings Ltd. Three was blocked from buying rival carrier Telefonica SA’s U.K. division O2 by European regulators in 2016 and since then the market is a zero-sum game to the carriers as they scrap over share in a highly-saturated customer base.
“Most U.K. mobile operators haven’t grown in a long time. The U.K. market has been very tough for them,” said Macquarie analyst Guy Peddy.
That’s good news for British consumers, who have seen rising overall inflation eat into their spending power elsewhere over the past year. Premium services cost less in the U.K. than Europe’s biggest market, Germany, and in Sweden, another highly saturated market. France, where Iliad SA has challenged the incumbents with lower prices, also offers cheaper unlimited data plans.
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