UK biggest phone network created as Three-Vodafone merger gets conditional approval
The competition watchdog has approved the creation of the UK’s biggest phone network by allowing the merger of Three and Vodafone.
Regulator the Competition and Markets Authority (CMA) issued the decision despite previously saying tens of millions could pay more due to the amalgamation.
CMA approval is contingent on the new entity spending billions to improve 5G internet services across the network, it said.
Legally binding targets have been set for the combined Vodafone and Three to agree and meet.
They must cap some mobile tariffs and offer preset contractual terms to mobile virtual network operators, mobile providers that do not own the networks they operate on, for three years.
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Both the CMA and communications regulator Ofcom will enforce these, 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.
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Better 5G services through increased investment would boost competition between the mobile network operators in the long term, it added, “benefiting millions”.
The decision takes the number of mobile phone networks from four to three and creates the UK’s biggest provider with 27 million customers.
The deal reported to be worth £16.5bn was announced in June 2023 and has been seeking regulatory approval for nearly a year.
Industry analyst Paolo Pescatore said it’s now up to both parties to deliver on their promises. “That should mean wins for UK plc – bringing much-needed investment in the network – and for consumers in the form of better services,” he said.
What does it mean for users?
It will take many years before the full merits of the deal are realised, he said. Mr Pescatore added: “Better price guarantees in the next few years will be a big pull for customers.”
The merger will “most likely” be the last major deal the CMA will see in telecommunications, Mr Pescatore said, as there are few strategic moves left within the UK.
Some believe bills could rise, however.
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Rocio Concha, Which?’s director of policy and advocacy, said the merger is likely to reduce competitive pressure which could lead to higher prices and lower quality for consumers in the short term.
“The CMA has taken a gamble with the package of remedies it has settled on,” she said.
“For this merger to work for consumers, the CMA and Ofcom must rigorously monitor whether the merged company sticks to its commitments and be prepared to act decisively if it does not.”