The £15 billion merger between Vodafone and Three in the UK has the potential to be “pro-competitive” if the mobile networks commit to investing in the country’s infrastructure and avoid early price hikes, the regulator has said.
The Competition and Markets Authority (CMA) indicated that it could give the tie-up the green light, having been investigating the deal since it was announced last year.
The watchdog had concerns that the merger could lead to higher prices for customers and harm the position of virtual network operators such as Sky Mobile and Lebara.
But on Tuesday, the CMA said it had outlined certain actions to be taken by the combined group that were likely to address its concerns.
We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed
This included committing to plans to upgrade the UK’s mobile network infrastructure over the next eight years, which would become a legal obligation overseen by regulators.
The pledge – which outlined £11 billion of investment – would boost competition between network providers in the UK, according to the CMA.
Vodafone and Three also must commit to not hiking prices for certain mobile tariffs for at least three years, which it said would protect millions of current and future customers.
Stuart McIntosh, chairman of the CMA’s inquiry group, said: “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.”
The merger is also closely aligned with the Government’s mission to drive growth and to encourage more private investment in the UK
Vodafone and Three said they believe the CMA’s provisional findings provide “a path to final clearance” of their merger plans.
“The merger will be a catalyst for positive change,” spokespeople for the firms said.
“It will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country.
“The merger is also closely aligned with the Government’s mission to drive growth and to encourage more private investment in the UK.”
Russ Mould, investment director at AJ Bell, said the potential green light would be a “game-changer” for Vodafone.
“Vodafone had banked on the merger being its ticket to regaining strength in the UK, boosting its customer numbers and triggering investment in a better mobile experience for users.
“Assuming it agrees to the competition authority’s demands, Vodafone could be at the forefront of a radical reshaping of the UK mobile network infrastructure.
“However, significant spending will inevitably lead to higher prices for consumers down the line, so the merger isn’t necessarily good for everyone.”
