• Swindon & Wiltshire M&A, deals
• Friday September 13 2024
• Author Name: Peter Davison

Competition watchdog expresses concerns over Vodafone-Three merger

The competition watchdog has warned the £15 billion merger of Newbury-headquartered Vodafone and Three, which is based in Reading, will lead to higher prices for millions of mobile phone customers.

In its provisional findings published this morning (Friday) the Competition and Markets Authority said the merger “may be expected to result in a substantial lessening of competition.”

Twenty seven million customers could end up with higher bills as a result, it says.

The CMA also warned that ‘wholesale’ network providers – like Lyca Mobile, Sky Mobile, and Lebara – providers who do not operate their own 4G and 5G networks – would also suffer from reduced competition, ultimately risking higher prices for customers.

The proposed Vodafone-Three merger would create the biggest retail mobile operator in the UK by revenue and the second largest by customers numbers.

However, the CMA did say the merger could improve the quality of mobile networks and bring forward the deployment of next generation 5G networks and services – although it says the weight given to this argument by Vodafone and Three was ‘overstated’.

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.

Vodafone said it “disagrees with a number of elements in today’s provisional findings” but will continue to “positively engage with the CMA to resolve outstanding matters ahead of the final report on 7 December 2024.”

Its views were echoed by Three. Both parties called the proposed merger “a once-in-a-generation opportunity to transform UK digital infrastructure with £11 billion of investment.”

And both denied the merger would lead to a lack of competition, saying the move would “deliver significant benefits for competition, customers and the country.”

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