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Vodafone, Orange seeks judicial review over phone charges

O2 delays 3G roll-out

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Vodafone UK is to seek a judicial review following the Competition Commission's ruling that mobile phone companies are overcharging consumers for making phone calls.

Vodafone - the UK's largest operator - "strongly disagrees with the outcome of the Competition Commission report" and believes the conclusions are "fundamentally flawed".

It maintains that the price cuts announced today will mean that the UK's 49 million mobile phone users will end up paying more.

In a statement Gavin Darby, chief exec of Vodafone UK, said: "We think it is wrong that our customers will be forced to pay more as a result of this report.

"The UK is one of the most competitive markets in Europe. Mobile phone bills have reduced by 70 per cent in the past five years which has been driven by intense competition, with four strong players and a fifth entrant due this year - this is harsher regulation on top of increased competition.

"We believe that the report is fundamentally flawed and, as a result, will be seeking a Judicial Review to protect the interests of our customers."

Orange say it too is considering a judicial review, to ensure that the Commission's report does not "unfairly penalise mobile customers".

In a statement, Orange said: "Orange notes that the Competition Commission confirms that the mobile industry overall is highly competitive, has created substantial benefit for customers and for the UK economy, is not yet earning an adequate return on capital, and faces considerable future investment in networks and services.

"Orange asks, therefore, why the Commission believes intervention is needed at all, especially when the result will be to the detriment of mobile customers?" it said.

It adds that the ruling ignores the industry's £24 billion investment in 3G licences. This is a point picked up by O2, which has indicated that it will abide by the ruling.

However, O2 maintains that in accepting the ruling it will "implement a range of actions aiming to recover lost revenue, and protect operating margins and cash flow yield".

Or to put it another way, it now intends to delay the planned launch of commercial 3G services until the second half of 2004. It will also postpone planned reductions in some of its tariffs and look to reduce its subsidy of handsets.

It will also "further intensify the pursuit of operational efficiencies" which could raise the spectre of job cuts. ®

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