The Competition and Markets Authority (CMA) has provisionally approved the proposed merger between Vodafone and Three, subject to legally binding commitments and consumer protections.
Industry analysts suggest this marks a crucial milestone for the deal.
“Vodafone and Three can tentatively order in the champagne as their blockbuster UK joint venture appeared to take another big step forward following a positive statement from the competition watchdog this morning,” says Kester Mann, Director of Consumer & Connectivity at CCS Insight.
The deal, which would create a mobile network giant serving over 29 million customers, was initially flagged for competition concerns in September. However, the CMA now believes these issues could be resolved through a comprehensive remedy package.
In a joint statement, Vodafone and Three wrote:
“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.”
Central to the approval is a multi-billion-pound commitment to upgrade the merged company’s network infrastructure across the UK, including an ambitious 5G rollout programme. This investment, combined with short-term customer safeguards, has been deemed sufficient to address previous competition concerns.
Stuart McIntosh, chair of the CMA’s inquiry group, commented: “We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are 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.”
As part of the remedies package, the merged entity must:
- Execute their joint network plan, involving significant infrastructure investments over an 8-year period.
- Maintain existing mobile tariffs and data plans for a minimum of 3 years.
- Ensure competitive wholesale deals for Mobile Virtual Network Operators (MVNOs) through pre-agreed prices and contract terms.
However, not all industry players will be celebrating.
“The watchdog’s statement won’t be welcomed by all,” notes Mann. “BT and Sky Mobile have sternly opposed the deal and are likely to vociferously attempt one final time to have it blocked before the CMA’s final deadline in less than five weeks.”
The merger would significantly alter the UK’s mobile landscape, currently dominated by four major network operators: Vodafone UK, Three UK, BT/EE, and Virgin Media O2.
“Approval would mark one of the most significant developments in the history of UK mobile, heralding the arrival of a new market leader with over 29 million customers,” Mann adds.
The CMA’s final decision is expected by December 7, with stakeholders invited to provide feedback on today’s announcement by November 12.
(Photo by Jametlene Reskp)
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