Vodafone UK, three mergers to reduce mobile competition: Regulator

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Antitrust regulators said on Friday that the planned merger of Vodafone’s UK mobile phone unit and Three’s unit “is likely to lead to a significant lessening of competition in the UK”.

The UK Competition and Markets Authority (CMA) has released the conclusions of its preliminary investigation into the merger of Three UK, owned by Hong Kong-based CK Hutchison.

The proposed merger, announced in June last year, aims to create the UK’s largest mobile operator with 27 million customers and accelerate the rollout of faster 5G connectivity.

British mobile giant Vodafone and Three UK plan to value the new group at 16.5 billion pounds ($22 billion).

In a statement on Friday, the CMA “provisionally concluded that the deal would be likely to significantly lessen competition in the UK”.

The regulator added that “the merger would lead to price increases for tens of millions of mobile customers or customers receiving reduced services, such as smaller data packages under their contracts.”

The report said, among other things, that the deal “could have a negative impact” on wholesale telecoms customers who rely on the UK’s four network operators – Vodafone, Three, BT EE and Virgin Media O2 – to provide their own mobile services.

However, the CMA noted that “the merger could improve the quality of mobile services and accelerate the deployment of next-generation 5G networks and services.”

The watchdog said it would consult on the findings and consider possible solutions to its concerns before making a final decision by mid-December.

He added that Vodafone and Three UK could address these issues through a number of measures, including “legally binding investment commitments overseen by the sector regulator and measures designed to protect both retail and wholesale customers”.

Unsurprisingly, Vodafone and Three UK have said they “disagree” with the CMA’s interim findings.

“By any measure, the merger is pro-growth, pro-customer and pro-competition. It can and should be approved by the CMA,” they said in a joint statement.

“This is not a final decision and we look forward to working with the CMA to seek approval.”

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