The Competition and Markets Authority (CMA) has provisionally approved the proposed merger between Vodafone and Three, subject to legally binding commitments and safeguards for consumers.
Industry analysts say the CMA’s provisional approval represents a major step forward for the transaction.
Kester Mann, Director of Consumer & Connectivity at CCS Insight, commented that Vodafone and Three can cautiously celebrate after the watchdog issued a positive statement, signaling progress for the proposed UK joint venture.
If completed, the merger would create a mobile operator serving more than 29 million customers. The deal was initially flagged over competition concerns in September, but the CMA now believes those concerns can be addressed through a comprehensive remedy package.
In a joint statement, Vodafone and Three said:
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.
A central element of the CMA’s provisional approval is a multi-billion-pound commitment to upgrade the merged group’s UK network infrastructure, including an ambitious 5G rollout plan. Combined with short-term customer protections, these commitments have been judged sufficient to mitigate the earlier competition issues.
Stuart McIntosh, chair of the CMA’s inquiry group, said the regulator believes the deal could be pro-competitive for the UK mobile market if its concerns are properly 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,” he added.
Under the proposed remedies package, the merged company must:
- Deliver the agreed joint network plan, comprising significant infrastructure investment carried out over an eight-year period.
- Maintain current mobile tariffs and data plans for at least three years to protect consumers from immediate price changes.
- Provide competitive wholesale terms for Mobile Virtual Network Operators (MVNOs) through pre-agreed pricing and contract conditions.
Not all stakeholders welcome the CMA’s statement. Mann noted that rivals such as BT and Sky Mobile have strongly opposed the merger and may seek to block it before the CMA’s final decision.
The proposed tie-up would reshape the UK mobile market, which is presently dominated by four major operators: Vodafone UK, Three UK, BT/EE and Virgin Media O2.
Approval would represent one of the most significant shifts in UK mobile history, creating a new market leader with more than 29 million customers, Mann added.
The CMA’s final determination is expected by December 7. Interested parties were invited to respond to the provisional findings by November 12.
(Photo by Jametlene Reskp)
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