Vodafone-Three merger could mean tens of millions paying more, says CMA

The Competition and Markets Authority (CMA) has concluded that the proposed £18 billion merger between Vodafone UK and Three could lead to tens of millions of mobile customers paying more.
The CMA also fears that the merger would have a negative impact on wholesale telecoms customers, such as Lyca Mobile, Sky Mobile and Lebara, which rely on the existing network operators to provide their own mobile services.
The regulator conceded that the merger could improve the quality of mobile networks and bring forward the deployment of next generation 5G networks. However, it warned that some of the companies’ claims were overstated and that the merged firm might not necessarily follow through on a proposed £11 billion investment programme after the merger.
Vodafone and Three, owned by the Hong Kong-based investor CK Hutchison, have argued that they need to combine operations to achieve the scale required to compete against EE, which is owned by BT, and Virgin Media O2, itself the product of a merger in 2021.
The proposed deal would create Britain’s biggest mobile network operator, bringing 27 million customers together and reducing the number of operators from four to three.
The competition regulator said it would explore potential solutions to its concerns before a final decision on the merger by December 7.
Stuart McIntosh, chairman of the inquiry group leading the investigation, said: “We will now consider how Vodafone and Three might address our concerns about the likely impact of the merger on retail and wholesale customers while securing the potential longer-term benefits of the merger, including by guaranteeing future network investments.”
In a joint statement, Vodafone and Three said: “This is not a final decision, and we look forward to working with the CMA to secure approval.”
Margherita Della Valle, Vodafone’s chief executive, said: “Our merger is a catalyst for change. It’s time to take off the handbrake on the country’s connectivity and build the world-class infrastructure the country deserves. We are offering a self-funded plan to propel economic growth and address the UK’s digital divide.”
The CMA has not suggested any structural changes to the proposed deal, rather it has put forward behavioural remedies instead. Paolo Pescatore, the telecoms analyst, said this signalled there was a “potential path” for the merger to go ahead.
Kester Mann from CCS Insight called the remedies “significant as many had feared that more onerous ‘structural remedies’ – such as selling assets or supporting a new entrant – would be required. In this sense, Vodafone and Three should be encouraged by the tone of the CMA’s report”.
Vodafone shares edge up ½p, or 0.7 per cent, to 77¼p.