- CMA rules Vodafone-Three merger could be viable
- Combined network would be one of the UK’s biggest
- Networks hail decision as pivotal moment for UK’s network infrastructure
The proposed merger between Vodafone and Three has taken a major step forward following an apparent declaration of support from the UK’s competition regulator.
The companies announced plans to join together in a £15bn merger deal back in 2023, combining two of the country’s most established mobile networks.
Following months of consultations, the Competition and Markets Authority (CMA) has said the merger could now go ahead, provided both companies make promises concerning pricing and 5G network expansion.
Vodafone-Three merger progress
In its provisional conclusions, the CMA has said the deal had “the potential to be pro-competitive for the UK mobile sector”.
“We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed,” noted Stuart McIntosh, chair of the CMA inquiry group leading the investigation.
“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger.”
“A legally binding network commitment would boost competition in the longer term and the additional measures would protect consumers and wholesale customers while the network upgrades are being rolled out.”
A final decision will now be made before the December 7 statutory deadline, with feedback on this initial news invited now.
The news is perhaps somewhat surprising, as back in September 2024, the CMA’s “provisional view” had “provisionally concluded” the merger would, “lead to price increases for tens of millions of mobile customers, or see customers get a reduced service such as smaller data packages in their contracts.”
“The CMA has particular concerns that higher bills or reduced services would negatively affect those customers least able to afford mobile services as well as those who might have to pay more for improvements in network quality they do not value,” it added.
It highlighted potential effects on MVNOs such as Lyca Mobile, Sky Mobile and Lebara which utilise the existing network operators, as the merger would reduce the number of network operators from 4 to 3, making it more difficult for MVNOs to “secure competitive terms”.
It also added the merger, “would lead to a substantial lessening of competition in the UK – in both retail and wholesale mobile markets.”
A final report will be published on December 7, 2024, with a further period of consultation now taking place.
Unsurprisingly, Vodafone and Three have positively to the news, calling the merger, “a once-in-a-generation opportunity to transform the UK’s digital infrastructure,” in a joint statement.
“The merger will be a catalyst for positive change,” the companies added, “it will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country. The merger is also closely aligned with the Government’s mission to drive growth and to encourage more private investment in the UK.
“As the Government has recognised, high quality digital networks are pivotal to this, as all countries’ future prosperity and technological advancement will be underpinned by world-class connectivity.”
The merger was announced in June 2023, with plans to form a new £15bn-valued telco giant and “create one of Europe’s leading 5G networks.” Vodafone was set to be the slight majority owner of the new combined group, currently known as MergeCo, controlling 51%, with CK Hutchinson keeping the remaining 49%.
MergeCo intends to invest over £6 billion in the first five years, and £11 billion over a ten year plan, to create a “best-in-class 5G network”, supporting between 8,000 and 12,000 new jobs in the wider economy, as well as expecting to deliver up to £5 billion per year in UK economic benefit by 2030, supporting the digital transformation for schools, hospitals and businesses, with its standalone 5G network will cover every school and hospital in the UK.
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