The $19 billion merger between Vodafone and Three UK may result in higher bills for millions of mobile customers, according to Britain’s competition regulator, the
Competition and Markets Authority (CMA). The deal, which would reduce the number of mobile networks from four to three, could also impact smaller providers like Sky Mobile, the regulator warned on Friday.
While the CMA raised concerns about potential price increases, it acknowledged that the merger might enhance network quality and accelerate the rollout of next-generation 5G technology. The regulator is set to explore potential solutions to these issues before making a final decision in December.
The merger, announced 15 months ago, involves Vodafone and Three UK, which is owned by Hong Kong-based CK Hutchison. The companies have challenged the CMA's earlier stance that maintaining four mobile networks is necessary to keep prices competitive. Both Vodafone and Three argue that the deal would create a more robust third competitor capable of rivaling market leaders BT’s EE and Virgin Media O2.
"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 ensuring the potential long-term benefits of the deal, including future network investments," said Stuart McIntosh, chair of the CMA inquiry.
Vodafone and Three responded by disagreeing with the CMA's view that the merger would hurt competition and possibly lead to higher prices. "This is not a final decision, and we look forward to working with the CMA to secure approval," the companies said in a joint statement.
The CMA suggested several remedies, including a commitment to continued network investment, though it noted this alone might not fully address all concerns. Other options included customer protections, such as allowing customers to extend their existing contracts for a defined period.
In the wholesale market, the CMA proposed that pre-agreed terms could be offered to third-party providers like Lyca Mobile, Sky Mobile, and Lebara, which rely on the major networks. It also suggested that a portion of the merged company's network capacity could be reserved for these smaller providers.
Analysts at Barclays believe these proposed remedies appear "broadly manageable." Vodafone shares rose by 0.2% in early trading following the news. Photo by Maksym Kozlenko, Wikimedia commons.