The UK’s competition regulator has raised significant competition concerns over the proposed merger between Vodafone and Three.
- The Competition and Markets Authority warns of potential price hikes or reduced services for mobile customers.
- There are specific worries about the impact on customers who can least afford mobile service changes.
- Vodafone and Three contest the findings, asserting the merger will address market dysfunctions.
- A final decision on the merger is expected in December this year.
The UK’s Competition and Markets Authority (CMA) has provisionally concluded that the planned merger of Vodafone and Three may lead to higher prices or a decline in service offerings for millions of mobile users. This decision is based on their comprehensive analysis, which considered the investments proposed by the two companies against the potential cost implications for consumers and rival network providers.
Particularly, the CMA expressed concerns that any increase in costs or reduction in service quality would disproportionately affect low-income customers who are least capable of absorbing such changes. This demographic might face either inflated bills or be forced to pay for improvements in network quality that do not necessarily align with their needs.
Stuart McIntosh, chair of the inquiry panel, shared that while Vodafone and Three’s commitments to enhancing network quality and expanding 5G connectivity were acknowledged, the potential detriments to market competition and consumer pricing were too significant to overlook. The authority is now considering how the telecom giants might address these issues to secure long-term benefits from the merger, including commitments to future network investments.
In response, Vodafone and Three publicly disagreed with the provisional conclusions, arguing that their merger is essential for remedying the inefficiencies of the UK’s current mobile market. Both companies emphasized their commitment to working with the CMA to prove that their merger would fulfill promises of comprehensive network investment.
Despite the CMA’s expressed concerns, it noted the possible improvements in network quality that the merger could support. Vodafone and Three revealed plans to invest £11 billion over the next five years to develop a new 5G network, which they argue would enhance service delivery across the UK. Nevertheless, they are aware that regulatory hurdles could yet thwart the merger, as past attempts with similar deals, such as Three’s proposed merger with O2, were obstructed by authorities.
Three’s CEO, Robert Finnegan, highlighted a potential deal breaker by warning that if the CMA enforced a divestment of spectrum as a merger condition, it could unravel their investment commitments. Vodafone CEO, Margherita Della Valle, reinforced the importance of timely action in upgrading networks by referencing a recent EU competitiveness report, which underlines the necessity for investment-focused merger remedies.
Ultimately, the outcome of the Vodafone-Three merger rests on addressing regulatory concerns without compromising investment commitments.
