Approval nears for £15bn Vodafone and Three merger
A range of investments have been proposed by the competition watchdog which, if accepted, would lead to the £15bn merger between Vodafone and Three being finally completed.
The Competition and Markets Authority (CMA) has suggested upgrading the merged company’s network across the UK, including the roll-out of 5G, as well as short-term customer protections.
The update comes after the planned merger was branded by the CMA in September as likely to lead to price increases for tens of millions of mobile customers.
At the time, the watchdog added that the deal, which was first announced last year, could also see customers get a reduced service such as smaller data packages in their contracts.
The CMA also said that it 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”.
However, the organisation has now set out a remedies working paper to seek views on the effectiveness of its proposed package.
The paper has provisionally found that a legally binding commitment to undertake the network integration and investment programme proposed by Vodafone and Three would “significantly improve the quality of the merged company’s mobile network, boosting competition between mobile network operators in the long term and benefiting millions of people who rely on mobile services”.
The CMA also found that short term protections would be needed to ensure that retail consumers and mobile virtual network operators “can continue to secure good deals during the initial years of network integration and investment roll-out”.
Final decision on Vodafone Three merger to be made next month
Stuart McIntosh, chair of the inquiry group leading the investigation, said: “We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed.
“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 is expected to be made before the 7 December deadline.
Merger a ‘catalyst for positive change’
In a joint statement, Vodafone and Three said: “The parties welcome the CMA’s recognition that the significant improvements in network quality delivered by their joint network plan will, ‘boost competition between mobile network operators in the long term and benefit millions
of people who rely on mobile services’.
“The merger is a once-in-a-generation opportunity to transform the UK’s digital infrastructure – which lags significantly behind its European peers – and for more than 50 million UK customers to benefit from a vastly better mobile experience.
“Vodafone and Three will need to study the working paper in detail. From what the CMA has communicated so far this morning, we believe it provides a path to final clearance.
“An appropriate balance appears to have been struck by ensuring that the significant benefits of the merged company’s investments can be realised in full and at pace to the benefit of the country and its citizens, while addressing the CMA’s stated concerns.
“However, it is essential that balance is preserved through to the end of the process, reflecting that the parties have offered extensive remedies, including by making their future network roll-out fully enforceable.
“The merger will be a catalyst for positive change. 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.”