13th Sep 2024 09:22
(Alliance News) - A telecoms tie-up between Vodafone Group PLC and Three in the UK could mean "tens of millions of mobile customers" seeing price increases, a UK regulator has said in a provisional finding.
The UK Competition & Markets Authority said the deal will lead to a "substantial lessening of competition".
The CMA said it welcomes responses to its provisional findings until October 4, and sets a deadline of September 27 for a notice of possible remedies.
A final decision is due on December 7, the CMA said.
Newbury, England-based Vodafone said it and Three "disagree with a number of elements in today's provisional findings".
"A final decision is not due until 7 December, and we will continue to positively engage with the CMA and look to resolve outstanding matters," Vodafone added.
Vodafone and Three aim to complete a merger, after the two telecommunications providers agreed a GBP15 billion deal last summer which would create the UK's largest mobile phone network.
The CMA added that it "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," it said.
The regulator also believes that wholesale telecommunications operators, including the likes of Lyca Mobile, Sky Mobile and Lebara, could be hurt as they rely on existing network operators to provide their services.
In response, Vodafone said it will work with the CMA to ensure the "once-in-a-generation" deal gets approved.
Making the case for the deal, Vodafone said: "The combination of Vodafone and Three will fix the country's dysfunctional mobile market characteristics, unleashing more competition and investment."
It continued: "The merger of Vodafone and Three will transform this current reality, bringing best-in-class 5G to every community, school and hospital in the country. The CMA also recognises that the merger would improve network quality.
"We will continue to work with them to demonstrate the merged company will deliver in full on the committed network investment."
Vodafone Chief Executive Officer Margherita Della Valle said: "Our merger is a catalyst for change. It's time to take off the handbrake on the country's connectivity and build the world-class infrastructure the country deserves. We are offering a self-funded plan to propel economic growth and address the UK's digital divide."
"Great network connectivity is a critical enabler of so many elements of our daily life and is central to the future prospects of so many sectors," Della Valle continued. "Businesses large and small are dependent on it and it enables new industries - like AI - to thrive. It facilitates a step change in productivity and care across the public sector, and it lies at the heart of every nation's future prosperity."
Vodafone and CK Hutchison, the owner of Reading, England-based Three, announced plans in June of last year to combine the UK businesses into a joint venture. Vodafone is to own 51% and CK Hutchison 49% of the combined operation.
The CMA in April of this year referred the deal to a more in-depth probe.
Vodafone shares were 0.5% higher at 77.14 pence each on Friday morning in London.
By Tom Budszus, Alliance News slot editor
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