But the concession is likely to be just the first step in a "long and intense period of negotiation" with antitrust authorities as they scrutinise a deal that would create the UK's largest mobile provider with 31m customers, argue industry analysts at CCS Insight. The combined group would be a serious threat to telecoms giants Vodafone (VOD), BT (BT.A) - which recently bought UK mobile market leader EE - and Sky (SKY), which plans to roll out mobile services using O2's network this year.
Along with a price freeze, CK Hutchison has offered to let Three's competitors buy small stakes - rather than just capacity - in its mobile network, removing the middleman and increasing their slice of the profits. The Hong Kong-based conglomerate, which is chaired by Chinese billionaire Li Ka-shing, also plans to invest £5bn to improve network coverage, reliability and download speeds in the UK. And it has promised to pass on cost savings from the merger to customers in the form of lower monthly bills.
Call barred
But that may be insufficient redress for Margrethe Vestager, head of Europe's competition authority. She has extolled the virtues of having four mobile operators in a country rather than three and effectively blocked the tie-up of Telenor and Telia in her native Denmark in 2015. Her main arguments are that fewer operators reduce competition, discourage innovation and drive up prices; she's expected to lay out her demands of Three in a 'statement of objections' soon.
Above: Margrethe Vestager and Li Ka-shing
CK Hutchison could be forced to sell parts of its network or 'spectrum' - the rights to specific frequencies that transmit wireless signals - to a company with mobile ambitions such as Sky (SKY) or Virgin Media, which is owned by Liberty Global (US:LBTYA) in a bid to maintain the status quo.
Connected regulators
Ofcom regulators have joined their European peers in denouncing the deal, arguing that four operators are needed to protect UK consumers. They highlighted studies showing average mobile prices were 10 to 20 per cent lower in markets with four providers compared to those with three.
CK Hutchison has successfully completed similar deals in Austria and Ireland in recent years, suggesting it will eventually reach a compromise with regulators. It will be keen to strike an agreement: Three now faces the combined forces of BT and EE and it could struggle to compete with rivals offering lucrative 'quad-play' bundles of broadband, TV and both landline and mobile telephony.
Some parties have accused regulators of being overly harsh. CK Hutchison could funnel cost savings from the deal into improving and expanding its networks and investing in new technologies such as ultra-fast 5G wireless, potentially leading to lower prices and better quality of service for consumers. Telecoms groups are also under pressure from services such as Skype and WhatsApp - which offer free calls and texts - and expanding wi-fi coverage, which reduces the need for mobile data. Moreover, in some countries that have moved from four to three mobile operators, soaring data usage has meant consumers pay less on average for every unit of data sent or received. And the current paradigm in the UK hasn't prevented price hikes: Three recently raised its 'unlimited' data tariff from £15 a month to £20.
