Competition Authority Consults on Vodafone and Three UK Merger
The Competition and Markets Authority (CMA) has today opened up a consultation for feedback on the proposed mobile mega-merger between Three UK and Vodafone (here), which would reduce the number of mobile operators in the market from four to three and may thus impact upon competition, consumer prices, jobs and security.
The agreement, which would see Vodafone hold a 51% slice of the business and CK Hutchison (Three UK) retain 49%, has thus far been promoted as something that would be “great for customers, great for the country and great for competition,” while also resulting in a major £11bn investment to upgrade the UK’s 5G mobile (broadband) infrastructure and network coverage.
However, regulators and politicians are known to be cautious, particularly given the concerns over any potentially negative impacts upon competition (e.g. both at retail and wholesale) and consumer prices that may result from having fewer primary operators. Not to mention some fears over national security (i.e. Three UK is owned by CK Hutchison, which is perceived as being closely tied to China) and the risk of job losses (here and here).
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The UK is not the first market to run into such concerns and EU regulators, as well as Ofcom, previously took the approach of effectively blocking such agreements. But that changed in 2020 after a ruling by the European Court of Justice (here) found that having only 3 operators still made for a competitive market, although this isn’t a green card for success and significant concessions may still end up being required.
Sarah Cardell, CEO of the CMA, said:
“Millions of consumers and businesses in the UK rely on Vodafone’s and Three’s mobile networks to stay connected.
We will be carefully considering how this deal may affect competition in the UK, which could affect the options and prices available to customers. We will also assess how it may affect incentives to invest in the quality of UK mobile networks.
This is an opportunity for those with an interest in this merger to let us know their views before we launch a full investigation.”
The CMA’s remit, by law, is to assess the potential impact of a merger on competition. It cannot consider other potential effects that a merger might have, for example, on employment or access to personal data. Any national security concerns would be a matter for the UK government, which could potentially intervene under the National Security and Investment Act if it finds concerns, but so far we’ve seen no solid indications of that.
According to the CMA’s related merger page for the deal, the regulator will seek initial feedback until 1st November 2023 before proceeding with a formal phase one investigation. But the reality with a deal this big is that the CMA will almost certainly find cause to go through both a phase 1 and deeper phase 2 investigation, as should be considered fairly normal – even for less contentious mergers.
Both Vodafone and Three UK have spoken of their desire for the transaction to close before the end of 2024, but that will be subject to regulatory approvals. The CMA notes that a Phase 1 merger investigation must be completed within 40 working days, while Phase 2 investigations can last 24 weeks.
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Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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“which would reduce the number of mobile operators in the market from three to four and may thus impact upon competition, consumer prices, jobs and security.”
Please proof read haha!
What a small minded comment Dean, just be glad this site exists rather than being quick to criticise!
We will be lucky to have any conclusion by mid 2025 if it goes through all phases by the CMA. Funny how BT and EE merging creating the biggest mobile operator with links to the company managing the national fibre backbone infrastructure they all use, was no problem, after Orange (owned by Hutchinson) merged with T Mobile of course.
To be fair the BT/EE merger wasn’t reducing the number of large players in the mobile network space. BT mobiles’ size was pretty small so it didn’t really impact competition.
Merging Three (one of the cheapest providers) with Vodafone (one of the most expensive) will impact competition. The new company could charge more than Three do now and the other two major networks probably won’t cut their prices to fill the void. It will just make things more expensive.
Because BT had no real mobile presence, aside from being a Vodafone MVNO, and EE didn’t have that much of a home broadband presence (which was already being run by BT Wholesale on their behalf anyway). BT/EE is in the same basket as VM/O2.
T-Mobile/Orange is the better comparison, but I guess that’s the first mover advantage.
also, Orange had not been owned by Hutchison for the best part of a decade by that point. They sold it off in the late 90s, was briefly under Vodafone control until they were rightly told to think again – so it ended up with France Telecom
@Ivor Vodafone were not “rightly told to think again” regarding Orange UK. It came under its indirect control due to its takeover of Mannesmann which ironically came about as result of Mannesmann’s takeover of Orange UK.
Vodafone had been eyeing up Mannesmann for a couple of years and when Mannesmann bought Orange UK as somewhat of a poison pill (as they wished to remain an independent business) and also expand into the UK, this is when Vodafone launched a hostile takeover of Mannesmann (which was the largest merger in the World. Vodafone was the most valuable company in UK, it’s share price changing by 1p was enough to change the entire FTSE 100 value by 1 point!) and indirectly acquired Orange UK as a result. At the time of the takeover, Vodafone said they would sell Orange UK asap and not interfere with it’s management during it’s brief ownership via Mannesmann. They never had any intention to merge Orange UK with Vodafone UK.
It’s also worth knowing the the Vodafone Mannesmann takeover was one of the worst deals in history. Vodafone bid £112 billion in their own shares, making for a merged company worth £224bn, back in 2000. By 2017, Vodafone was worth £87bn, and today a paltry £21bn. All of which shows what anybody knows, which is that Vodafone directors are idiots, prone to serial misconceived, overpaid M&A, whilst under-investing in their core business and providing sh** customer service.
And that’s why this deal should be blocked, because Vodafone are busy flushing themselves down their own toilet, they shouldn’t be allowed to take Three with them.
@Andrew G In fairness the entire Telecoms Media & Technology sector or TMT sector as it was dubbed during the late 1990s/early 2000s had ridiculous valuations during the dotCom era before the bubble burst. So the valuation for the merger at the time was more down the “analysts” and brokers at the time. Which as we know today ludicrously overvalued these businesses. The likes of Freeserve, COLT, Thus and Energis in the telecom sector. BT had a share price of £15 at one point!
The company has never been the same after Chris Gent (although he did make some mistakes like investing in Vizzavi). The company messed up running many of their large acquisitions such as Vodafone Japan by being so arrogant as the largest mobile telecoms company at the time , they largely replaced local management and thought they would understand the Japanese market better, but eventually had to bail out and sold it to Softbank. As for Vodafone India, well that would take all day to write about. Selling their stake in Verizon Wireless is debatable. A merger with Verizon Communications probably would have worked out better for shareholders in the longrun.
so reducing competition benefits the consumer in what way, please explain?
It doesn’t
I agree completely. It shouldn’t be allowed, any company operated at the behest of the Chinese Communist party shouldn’t be allowed anywhere near UK infrastructure, let alone be allowed to operate in the UK, to allow it to merge with Vodafone is asking for trouble IMHO.
The UK is close to becoming a communist country so perhaps it’s exactly what the country needs.
Should never be allowed as surprises come later this has all happened in short NO.
Won’t happen but not because of the operators but rather short sighted Nimbyism etc
Their blanket 5G coverage should be welcomed with open arms especially with the growth to the economy it will bring however as they insist on a much better network from day 1 than they have to deliver on that.
As to those saying prices will go up, well until they actually do than they’re just pointless rumours.
How did the Vodafone Three merger go in Australia? did that result in lower prices and better coverage?
No but the Australian market is 25m people, partially in very poor terrain (not as urban as the majority of Britain) and also has players with a worse capital base
Not exactly comparible, but T-Mobile were very competitive in the UK and Orange more expensive, We now have EE who are the most expensive. With Vodafone’s debt issues they will probably abolish the 3 brand and push everyone on to their more expensive tariffs. The only other way they could be allowed is if like in 3’s merger in Italy they are required to give frequencies away to a new 4th entrant.
Please no
I would argue to take a look at what happened in Australia.
Three left the market, TPG is the new owner of Vodafone with a brand deal and consumers never gained anything..