- UK regulator says the Vodafone and Three merger can go ahead
- Both companies need to commit to price promises and 5G investment
- Vodafone boss has promised that prices won’t rise following the merger
The long-mooted merger between Vodafone and Three has been given the green light by regulators, in a move that creates the UK’s biggest mobile phone operator. But what does this all mean for customers of both networks?
Ever since the £15bn merger was announced back in June 2023, opinions have been divided on what might happen – and whether or not it’ll ultimately be a good deal for customers.
On the downside, evidence given to the Business and Trade Committee last year suggested that the typical result of these mergers is ultimately higher bills for consumers.
But in defending the deal, Vodafone’s Chief Executive Margherita Della Valle has promised in an interview with the BBC’s Today programme that the deal will be “self-funded” and that means “no extra costs from public funding and no extra cost for our customers”.
Today’s Competition and Markets Authority (CMA) statement says that Vodafone and Three need to agree to legally-binding commitments, including “certain mobile tariffs to be capped for three years” while “virtual mobile providers will have access to pre-set wholesale prices and contract terms”.
So what happens next? Here’s what experts are predicting.
What’s the latest Vodafone and Three merger news?
Today’s statement from the CMA (Competition and Markets Authority) marks then end of months of wrangling between Vodafone, Three and the UK watchdog.
Since announcing plans for a huge merger in June 2023, Vodafone and Three have been at loggerheads with the UK’s watchdog about whether or not the deal should go through.
But today that process appears to be over, with Vodafone and Three given the green light to merge, based on commitments to investing billions in the UK’s 5G network and freeze existing prices on tariffs and data plans for the first few years.
This all follows the CMA’s “provisional” declaration a month ago that strongly hinted that it would approve the merger with these stipulations. This is big news for anyone who use mobile networks in the UK – here’s what it means…
What are analysts saying about the Vodafone and Three merger?
Opinions are still split on whether or not the Vodafone-Three merger is good news long-term for UK consumers, with the impact likely to hinge on how well the CMA enforces the companies’ commitments – but everyone agrees it’s a huge shakeup.
“This mega-merger marks one of the most significant moments in the history of UK mobile”, according to Kester Mann, Director, Consumer and Connectivity at CCS Insight.
According to Mann, the decision is “the right one” and could be good news for all UK mobile network customers, in the long-term at least. “It should pave the way for more-efficient investments to bring about much-needed improvements to mobile services in the UK”.
But not everyone is quite as positive on the impact for consumers. Rocio Concha, Which? Director of Policy and Advocacy, said: “The two companies are currently close competitors so the merger is likely to reduce competitive pressure in the market which could lead to higher prices and lower quality for consumers, at least in the short term”.
Concha added that “the CMA has taken a gamble with the package of remedies it has settled on” and that, for it to work for consumers, “the CMA and Ofcom must rigorously monitor whether the merged company sticks to its commitments and be prepared to act decisively if it does not.”
What does the Vodafone and Three merger mean for you?
Right now, EE is the UK’s most popular mobile network, according to Confused data, with around 25 million customers. O2 is close behind with 24 million customers, with Vodafone and Three currently behind those big two. This merger catapults the joint company (MergeCo) into becoming the new market leader with 29 million customers.
In the short term, little will change for both existing and future customers. Vodafone says “existing Vodafone and Three contracts will stay the same”. And the CMA’s stipulations mean both networks will need to “commit to retaining certain existing mobile tariffs and data plans for at least three years, protecting millions of current and future Vodafone / Three customers (including customers on their sub-brands) from short-term price rises in the early years of the network plan”.
So whether you’re on Vodafone, Three, or one of the so-called Mobile Virtual Network Operators (MVNO) providers that piggyback on both networks, you should be protected from any price rises or big contract changes – for the first few years following the merger, at least.
The question is what happens after that – and in his analysis provided to the Business and Trade Committee on the merger last year, Professor Tommasso Valleti (former chief competition economist at the European Commission) said that “the answer is unambiguous” and that these mergers typically see “prices go up by 16%”.
This means the longer-term result of the merger on consumers could come down to how successfully Ofcom (the telecoms regulator) and the CMA get Vodafone and Three to stick to those commitments on mobile tariffs, data plans, and wholesale deals for MVNOs.
Either way, the CMA seems confident that the Vodafone-Three merger will be a net positive for the UK’s mobile networks. It says the deal would see “a multi-billion-pound commitment to upgrade the merged company’s network across the UK, including the roll-out of 5G”.
In theory, the merger shouldn’t have a huge effect on existing Vodafone and Three customers in the short-term, due to the CMA’s proposed stipulations. But the long-term landscape of the UK’s mobile networks will undoubtedly change – and despite Vodafone’s proclamations today, customers could ultimately end up footing some of the bill for those much-needed infrastructure upgrades.
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mark.wilson@futurenet.com (Mark Wilson)
