Britain’s competition regulator agreed to the £15 billion ($19 billion) merger between Vodafone and Three UK, subject to certain conditions. The deal has been approved by the Competition and Markets Authority but only if both firms commit to heavy investment in Britain’s 5G infrastructure.
The two companies announced that they were in a merger last year. When completed, the merged company will have Vodafone in majority ownership at 51% while CK Hutchison will hold the remaining minority interest. The deal, which is going to reduce the UK’s major telecom providers to three from four, has been reviewed extensively since its announcement to date, including an extensive investigation by the CMA, which raised concerns of price hikes and reduced services following the merger.
The deal will see Vodafone and Three agree to bind themselves legally to the development of a comprehensive 5G network across the UK in the next eight years. The companies have committed themselves to investing £11bn into the nation’s telecommunication infrastructure. As further measures to protect competition, the CMA has enforced provisions on capping certain mobile tariffs and committing to offering fixed terms for wholesale services offered to Mobile Virtual Network Operators.
The decision made by the regulator reflects thorough consideration of consumer feedback as well as evidence presented in the course of the investigation. According to CMA chair Stuart McIntosh, the merger would strengthen competition in the UK mobile sector but needs to be supported by these safeguards to ensure fair market practices.
Vodafone said it is sure that the merger will support the delivery of the kind of digital infrastructure the UK needs, and chief executive Margherita Della Valle described it as a “new force” in the telecoms market. Industry analysts nevertheless warned that the complete upside may take years to reflect, with Paolo Pescatore of PP Foresight saying that much greater challenges lie ahead before that potential benefit can be derived. Completion is expected by the first half of 2025 after all mandatory regulatory processes and commitments shall have been fully implemented.