Vodafone-Three Merger Faces Scrutiny from UK Competition Watchdog

Vodafone-Three merger in doubt following competition investigation By Proactive Investors

An investigation by the Competition and Markets Authority concluded that the merger could result in higher prices or reduced services for tens of millions of mobile customers. The regulator found that customers might have to pay more for improvements in network quality that they do not necessarily value. Additionally, the merger could negatively impact wholesale telecoms customers, including Lyca Mobile, Sky Mobile and Lebara, which depend on major networks to provide mobile services. A reduction in the number of network operators from four to three would make it harder for these customers to secure competitive terms, said the CMA. Stuart McIntosh, chair of the inquiry group leading the investigation, said: "We've taken a thorough, considered approach to investigating this merger, weighing up the investment the companies say they will make in enhancing network quality and boosting 5G connectivity against the significant costs to customers and rival virtual networks. "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 response, Vodafone said the merger "is a once-in-a-generation opportunity to transform UK digital infrastructure with £11bn of investment". Vodafone boss Margherita Della Valle stated: "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. "Great network connectivity is a critical enabler of so many elements of our daily life and is central to the future prospects of so many sectors. "Businesses large and small are dependent on it and it enables new industries - like AI - to thrive. It facilitates a step change in productivity and care across the public sector, and it lies at the heart of every nation's future prosperity." The CMA's final decision is expected on 7 December. Responses to the initial findings are being taken until 4 October.

UK CMA says Vodafone-Three tie up will weaken competition

(Alliance News) - A telecoms tie-up between Vodafone Group PLC and Three in the UK could mean "tens of millions of mobile customers" seeing price increases, a UK regulator has said in a provisional finding. The UK Competition & Markets Authority said the deal will lead to a "substantial lessening of competition". The CMA said it welcomes responses to its provisional findings until October 4, and sets a deadline of September 27 for a notice of possible remedies. Newbury, England-based Vodafone said it and Three "disagree with a number of elements in today's provisional findings". "A final decision is not due until 7 December, and we will continue to positively engage with the CMA and look to resolve outstanding matters," Vodafone added. Vodafone and Three aim to complete a merger, after the two telecommunications providers agreed a GBP15 billion deal last summer which would create the UK's largest mobile phone network. The CMA added 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," it said. The regulator also believes that wholesale telecommunications operators, including the likes of Lyca Mobile, Sky Mobile and Lebara, could be hurt as they rely on existing network operators to provide their services. In response, Vodafone said it will work with the CMA to ensure the "once-in-a-generation" deal gets approved. Making the case for the deal, Vodafone said: "The combination of Vodafone and Three will fix the country's dysfunctional mobile market characteristics, unleashing more competition and investment." It continued: "The merger of Vodafone and Three will transform this current reality, bringing best-in-class 5G to every community, school and hospital in the country. The CMA also recognises that the merger would improve network quality. "We will continue to work with them to demonstrate the merged company will deliver in full on the committed network investment." Vodafone Chief Executive Officer Margherita Della Valle 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." "Great network connectivity is a critical enabler of so many elements of our daily life and is central to the future prospects of so many sectors," Della Valle continued. "Businesses large and small are dependent on it and it enables new industries - like AI - to thrive. It facilitates a step change in productivity and care across the public sector, and it lies at the heart of every nation's future prosperity." Vodafone and CK Hutchison, the owner of Reading, England-based Three, announced plans in June of last year to combine the UK businesses into a joint venture. Vodafone is to own 51% and CK Hutchison 49% of the combined operation. The CMA in April of this year referred the deal to a more in-depth probe. Vodafone shares were 0.5% higher at 77.14 pence each on Friday morning in London. Comments and questions to [email protected] Copyright 2024 Alliance News Ltd. All Rights Reserved.