Vodafone and Three hit back at union concerns deal will kill competition
Vodafone and Three have hit back at a warning from trade union Unite that their telco tie-up will stifle competition, threaten national security and raise customer bills by up to £300 a year.
Unite, which slammed the merger as a “terrible deal for Britain”, argued it will not provide the promised greater investment for the UK and will hurt competition in the country’s telecoms sector, during a Business and Trade Committee hearing in the House of Commons on Tuesday.
The merger is only about the telecoms companies “looking for a shortcut to increase their profit levels” Unite’s investigative researcher, George Stevenson, said at the hearing on Tuesday.
“Our research is showing that this is going to increase pricing power for these companies and that is their primary concern,” he added.
“Throw in data security risks from Three’s Chinese-state linked owners and you’ve got a terrible deal for consumers, a terrible deal for workers, and a terrible deal for national security,” said Stevenson.
But Vodafone and Three representatives argued that the merger, currently under investigation by Britain’s competition watchdog, would boost competition and create more jobs in the industry.
Nicki Lyons, Vodafone UK corporate affairs and sustainability director, said the company’s investment pledge of £11bn through the deal “will have significant benefits to consumers as well and to competition in the sector”.
Vodafone and Three argue the merger will help rather than hinder competition as they say it creates a third mobile network operator with the scale to effectively compete with the UK’s two leading operators, which are both also converged – BT/EE and Virgin Media O2.
“We believe that jobs will actually be created as a consequence of this merger for building the network, to create and support the IT systems and to maintain this new network,” she went on to say.
The company’s UK network and development director Andrea Dona said the company reckons the merger could create up to 12,000 jobs.
A week ago the Competition and Markets Authority announced it is investigating the deal. It said it is “carefully considering” how a potential merger could affect competition in the UK and customer prices.
In response to Unite’s remarks, a Vodafone spokesperson said: “We are committed to maintaining our presence in the flexible, contract-free market where there are no annual price increases and our social tariffs in both mobile and fixed markets.
“The objective of our joint business plan is to strengthen, expand and enhance our joint network, as a result, we will have a very strong incentive to price keenly to make maximum use of the expanded capacity,” they added.
During the hearing, Stephen Lerner, Three general counsel and regulatory affairs director, said: “We’re trapped in this vicious cycle of low scale, low returns and lack of growth.
“Absent this merger, we don’t see any real ability to move forward and really grow the business in a way that’s going to break that cycle.
He added that the current situation with two sub-scale operators and two scale operators in BT and VMO2 is “not healthy for competition”.