Customers on Three and Vodafone mobile networks have been warned they face ‘higher prices’ if they merge into one network as planned.
The Competition and Markets Authority has today announced it has ‘competition concerns’ over the planned merger between Three and Vodafone.
The CMA says that its ‘provisional’ findings indicate that ‘tens of millions of mobile customers’ face higher prices or a reduced service if the merger goes ahead.
The government body said it had ‘particular concerns’ that higher bills would hit the poorest customers the hardest.
It said: “An in-depth investigation by the Competition and Markets Authority (CMA) has provisionally found competition concerns over Vodafone’s planned merger with Three in the UK.
“The investigation, led by an independent inquiry group, has provisionally concluded that the merger would lead to price increases for tens of millions of mobile customers, or see customers get a reduced service such as smaller data packages in their contracts.
“The CMA has particular concerns that higher bills or reduced services would negatively affect those customers least able to afford mobile services as well as those who might have to pay more for improvements in network quality they do not value.”
The CMA also warned that the merger could impact cheap ‘piggyback’ networks which use existing providers’ signal such as Lyca Mobile, Sky Mobile and Lebara.
It added: “The CMA has also provisionally found that the merger would negatively impact ‘wholesale’ telecoms customers – Mobile Virtual Network Operators (MVNOs) such as Lyca Mobile, Sky Mobile and Lebara – which rely on the existing network operators to provide their own mobile services.
“The merger would reduce the number of network operators from 4 to 3 making it more difficult for MVNOs to secure competitive terms, restricting their ability to offer the best deals to retail customers.”
The CMA did recognise that the merger could improve the quality of Vodafone and Three’s network including better 5G, but added that the claims ‘are overstated’.
Stuart McIntosh, chair of the inquiry group leading the investigation, said: “We’ve taken a thorough, considered approach to investigating this merger, weighing up the investment the companies say they will make in enhancing network quality and boosting 5G connectivity against the significant costs to customers and rival virtual networks.
“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 securing the potential longer-term benefits of the merger, including by guaranteeing future network investments.”
