British telecoms giants Vodafone and Three are one step closer to concluding their multibillion-dollar merger, awaiting the implementation of proposed remedies to address competition concerns raised by regulators. The Competition and Markets Authority (CMA) announced that the £15 billion ($19.5 billion) deal could be approved if the companies committed to significant investments in the UK's telecoms infrastructure and improve customer protection.
Vodafone has indicated that the new entity plans to invest £11 billion ($14.46 billion) in the UK's telecoms infrastructure. According to the CMA, several conditions must be met for the merger to proceed. These include a legally binding commitment to upgrade and improve networks over the next eight years, overseen by telecoms regulator Ofcom and the CMA. Additionally, some existing mobile tariffs and data plans must be maintained for a minimum of three years for both current and future Vodafone and Three customers. The agreement also provides that mobile virtual network operators (MVNOs) will continue to receive competitive wholesale offers.
After the announcement, Vodafone shares rose 1.5%. Stuart McIntosh, chair of the CMA inquiry group, said the merger could be “pro-competitive” if concerns were adequately addressed. He stressed that binding commitments together with protections for consumers and wholesale suppliers will alleviate the regulator's concerns while allowing the benefits of the merger to be realised.
A Vodafone spokesperson expressed optimism, saying the CMA's proposed framework offers a viable route to final approval. The spokesperson highlighted the merger's potential to deliver significant benefits for businesses and consumers across the UK, including the rollout of advanced 5G technology into schools and hospitals.
The CMA is expected to make a final decision on the merger by December 7. Previous findings had suggested that the merger could lead to higher prices for consumers and negatively impact competition between MVNOs such as Sky Mobile and Lebara. In response, the CMA has consulted on possible solutions to these problems.
Vodafone first proposed a merger with CK Hutchison, owner of Three, in June the previous year, with Vodafone set to hold a 51% stake in the new merged entity. This merger represents one of the first major consolidation efforts in the UK telecoms sector for several years, reducing the number of mobile operators in the country to just three.
Vodafone says the merger is needed to improve the UK's digital infrastructure, which has lagged behind that of other major economies. The company says increased investment is essential to advance next-generation 5G networks and improve nationwide coverage.
Kester Mann, director of consumer and connectivity at CCS Insight, described the CMA's recent announcement as a significant development for the merger process. He noted that, if approved, it would create a new market leader with more than 29 million customers.
However, not all stakeholders support the merger. BT, the UK's largest telecoms network provider, has expressed strong opposition, arguing that the merger would create an entity with an “unprecedented” share of capacity and spectrum in the UK and Western European markets. BT argues that this consolidation would substantially reduce competition and hinder investment in the telecommunications sector.
As the December deadline approaches, the merger debate continues, with opponents likely to make a final push to block the deal before the CMA reaches its conclusion.
