The $19 billion merger between Vodafone and Hutchison's Three UK appears poised to receive regulatory approval, as Britain's urgent need for infrastructure investment takes precedence over
concerns about short-term competition.
On Tuesday, Britain's anti-trust regulator indicated that combining the country's third and fourth-largest mobile operators could be "pro-competitive," provided specific measures and safeguards are put in place.
This provisional ruling signals a shift in the regulator's stance, which has traditionally held that a minimum of four operators is necessary to maintain competitive pricing for consumers. Notably, a similar merger was blocked nine years ago for this reason.
The announcement comes on the heels of the UK's new Labour government assuring investors that under its administration, regulators would support deals and corporate strategies that enhance infrastructure and public services.
According to data from analytics firm OpenSignal, the UK ranks 22nd out of 25 European countries for 5G availability and download speeds, and it has the slowest download speeds among G7 nations—a disadvantage as economies increasingly rely on digital infrastructure.
When Vodafone and Three UK, owned by Hong Kong-based CK Hutchison, announced the deal in June 2023, they committed to investing £11 billion in their joint network to accelerate 5G rollout. They argued that this level of investment would be unattainable without the merger and emphasized that the deal would create a stronger competitor to BT’s EE and Virgin Media O2.
The Competition and Markets Authority (CMA) stated on Tuesday that the merger could proceed if the recommended remedies are followed. These include a binding commitment to invest in 5G infrastructure and short-term consumer protections.
Vodafone and Three responded optimistically, stating there is now a "path to final clearance." In a joint statement, they described the merger as a "once-in-a-generation opportunity to transform the UK’s digital infrastructure," which currently lags behind European counterparts.
The CMA is expected to make its final decision by December 7.
Back in 2015, when the UK was still part of the European Union, Hutchison attempted to acquire Telefonica's O2 network. That deal, opposed by UK telecoms regulator Ofcom, was ultimately blocked by the European Commission over concerns about reduced competition. Photo by Vodafone, Donegal Town by Kenneth Allen, Wikimedia commons.