The proposed merger between Vodafone and Three has been approved by the Competition & Markets Authority (CMA), paving the way for the UK’s largest mobile network to be formed.
This would take the number of mobile network operators in the UK down to three, with the new entity competing with Virgin Media O2 and BTEE, whose networks are known as O2 and EE to consumers.
The completion of the deal, which is reportedly worth £16 billion, relies on Vodafone and Three committing to investing £11 billion to roll out an improved 5G network across the country, which will also benefit Virgin Media O2, which uses some of Vodafone’s network in an existing agreement.
Vodafone Group CEO Margherita Della Valle said: “Today’s decision creates a new force in the UK’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves”, while Canning Fok, Deputy Chairman of CK Hutchison and Chairman of CK Hutchison Group Telecom Holdings, Three’s owner, said the deal would ensure that “customers across the country benefit from world-beating network quality.”
If approved, the merged company would leapfrog EE’s 25 million customers and O2’s 24 million to serve 27 million Brits. Vodafone and Three will have to confirm what the new entity will be called, and whether existing customers will pay the same fees they have currently agreed to on their existing mobile plans.
“It’s crucial this merger doesn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market,” said Stuart McIntosh, chair of the independent inquiry group leading the CMA’s investigation.
“Having carefully considered the evidence, as well as the extensive feedback we have received, we believe the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed – but only if Vodafone and Three agree to implement our proposed measures.
“Both Ofcom and the CMA would oversee the implementation of these legally binding commitments, which would help enhance the UK’s 5G capability whilst preserving effective competition in the sector.”
“Merging two networks is no easy feat,” telco analyst and founder of PP Foresight, Paolo Pescatore, told Express.co.uk.
“While there are past examples with BT/EE and VMO2 to draw upon, it’s not going to be smooth sailing.”
Mr Pescatore said the deal was good for Three as its business model would not have lasted long term, and suggested the merger could be good for competition despite the shrinking of UK networks from four to three.
“Rivals will have a window of opportunity to lure disgruntled customers during this painful integration process. Priorities will be implementing a successful strategy and choosing a brand that resonates with consumers and business. On this it is very hard to see the Vodafone brand disappearing from its home core UK market. Better price guarantees in the next few years will be a big pull for customers.”
