• Swindon & Wiltshire M&A, deals
• Tuesday November 5 2024
• Author Name: Peter Davison

Vodafone / Three merger could get green light following watchdog investigation

The proposed £15 billion merger between communications giants Vodafone and Three could go ahead, the findings of an investigation by government watchdog the Competition and Markets Authority suggest.

The CMA said this morning (Tuesday, November 5) that the merger of Newbury-headquartered Vodafone and Three, which is based in Reading, could be good for customers if the parties press ahead with a multi-billion-pound commitment to upgrade the merged company’s network across the UK, including the roll-out of 5G.

The CMA investigation – led by an independent inquiry group – provisionally found in September that the merger could lead to higher prices for customers and harm the position of mobile virtual network operators, such as Sky Mobile, Lyca, Lebara and iD Mobile.

The CMA also consulted on potential solutions to address its concerns – known as remedies.

Today, the CMA published its Remedies Working Paper to seek views on the effectiveness of a proposed remedy package.

It provisionally finds 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.

The remedies proposed today would require Vodafone and Three to:

• Deliver their joint network plan – which sets out the network upgrade and improvements they will make through significant levels of investment over the next 8 years across the UK. This would be a legal obligation overseen by both Ofcom – the telecoms regulator – and the CMA
• Commit to retain certain existing mobile tariffs and data plans for at least 3 years, protecting millions of current and future Vodafone / Three customers (including customers on their sub-brands) from short-term price rises in the early years of the network plan
• Commit to pre-agreed prices and contract terms to ensure that Mobile Virtual Network Operators can obtain competitive wholesale deals

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.”

Today’s announcement is provisional, with a final decision due before the 7 December statutory deadline. The inquiry group is inviting feedback on today’s announcement by 5pm on 12 November.

In a joint statement, Vodafone and Three welcomed the findings.

“Vodafone and Three will need to study the Working Paper in detail. From what the CMA has communicated so far, the companies believe it provides a path to final clearance,” said the parties.

“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 encourage more private investment in the UK.

“As the Government has recognised, high quality digital networks are pivotal to this1, as all countries’ future prosperity and technological advancement will be underpinned by world-class connectivity.”