The UK’s biggest phone network merger of Vodafone with Three has been given conditional approval by the competition watchdog, despite saying just months ago that it could cost tens of millions customers more.
After 18 months of detailed and thorough analysis, regulator the Competition and Markets Authority (CMA) has decided that the merger should be allowed to proceed if both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK.
The decision means the number of mobile phone networks reduces from four to three and creates the UK's biggest provider with 27 million customers.
Both Vodafone and Three welcome the announcement by the CMA.
In its final decision, published in early December, the group has confirmed it is now satisfied that the proposed network commitment, supported by shorter term protections for both retail and wholesale customers, resolve its competition concerns.
The merger will be allowed to proceed subject to legally binding targets have been set out for the combined Vodafone and Three to agree and meet.
They must cap some mobile tariffs and data plans directly protecting large numbers of Vodafone / Three customers from short-term price rises in the early years of the network plan.
They will also be required to offer pre-set prices and contract terms for wholesale services (again for three years) to ensure that virtual network providers can obtain competitive terms and conditions as the network plan is rolled out.
The network commitment would be overseen by both the CMA and communications regulator Ofcom, with annual progress reports being submitted by Vodafone and Three.
The CMA would be responsible for monitoring and enforcing the consumer tariffs and wholesale terms protections.
This is enough to satisfy competition concerns, the CMA said.
The deal – which is worth £16.5bn - was announced in June 2023 and has been seeking regulatory approval for nearly a year.
A comment on the Vodafone website says that the merger is a “once-in-a-generation opportunity to transform the UK’s digital infrastructure”.
From the outset, Margherita Della Valle, Vodafone Group’s CEO, described the combination as being, “great for customers, great for competition and great for the country.”
Vodafone and Three have committed to invest £11 billion to create one of Europe’s most advanced 5G networks that will reach 99 percent of the population and benefit over 50 million customers.
The combination will create a new, stronger player in UK mobile, with the scale to drive more intense competition across both the retail and wholesale markets.
The £11 billion network investment will require no public funding and, as highlighted by the CMA, will “boost competition between the mobile network operators in the long term, benefiting millions of people who rely on mobile services.”
Della Valle added: “This decision creates a new force in the UK’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves.”
Canning Fok, Deputy Chairman of CK Hutchison and Chairman of CK Hutchison Group Telecom Holdings, said: “When Three and Vodafone are combined, CK Hutchison will fully support the merged business in implementing its network investment plan, the cornerstone of the approval by the CMA, transforming the UK’s digital infrastructure.”
Vodafone and Three will study the Final Report in detail and will continue to engage with the CMA as they put in place the final undertakings.
Vodafone will own 51 percent of the equity and, after three years following completion and subject to certain conditions, Vodafone may acquire Hutchison's 49 percent stake via a Put and Call option.
Stuart McIntosh, chair of the independent inquiry group leading the investigation, said: “Having carefully considered the evidence, 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.”
The merger is expected to formally complete during the first half of 2025.