Unite Raise Conflict of Interest Concerns Over Vodafone and Three UK Merger
Unite the Union, which has previously expressed its opposition to Vodafone and Three UK’s proposed merger (here), is attempting to up the ante by pressing some of Vodafone’s largest shareholders (e.g. Blackrock, Vanguard, Norges Bank and local authority pension funds) to take a stand, on conflict of interest grounds, at the next AGM.
The deal, which would see Vodafone hold a 51% slice of the business (Three UK / CK Hutchison on 49%), has 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 (mobile broadband) infrastructure and network coverage.
However, Unite and others have raised concerns about the merger, both on national security grounds, and because of reduced competition (i.e. three mobile network operators, instead of four), the accompanying risk of price increases and, naturally, the likelihood of big job losses. The union has now set out these concerns in more detail as part of their pre-briefing for the forthcoming Vodafone AGM on 25th July 2023.
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“Unite believe it is critical that any potential conflicts of interest relating to parties involved in the merger are addressed in a rigorous and transparent way. Therefore, we urge Vodafone investors to consider withholding support from resolutions at the company’s forthcoming AGM on 25 July,” said the union.
Unite’s Concerns (Briefing Extract)
➤ Research from the Balanced Economy Project has shown that prices after a Three-Vodafone merger could be up to 50% higher. Based on current average spending patterns, this means UK consumers would pay up to £300 more per year on their mobile bills.
➤ On top of this, price levels in European markets with only three mobile network operators (MNOs) are 20% higher on average than those with four.
➤ Following a merger, Three’s ultimate parent company, CK Group, will become a “person of significant control” over a business that will serve 40% of the UK’s population. Unite has uncovered extensive collaboration between the CK Group, the Li family which controls it, and the Chinese state.
➤ The CK Group would also become party to Vodafone’s sensitive government contracts, including with the Ministry of Justice, and strategic national assets in the form of Vodafone’s subsea communications cables, which link the UK to global communication networks.
Unite says they’ve already been in contact with major Vodafone shareholders, including Blackrock, Vanguard, Norges Bank and local authority pension funds. The union is asking them to vote against the re-election of David Nish, and the remuneration policy, on conflict-of-interest grounds (they’ve also been in touch with proxy voting advisors Glass Lewis and ISS). But whether any of this will have a meaningful impact is yet to be seen. Vodafone has been asked to comment.
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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Let’s hope the merger won’t happen! I don’t want Vodafone take over Three as 51% ownership.
Hoping this merger gets refused, especially with how childish Vodafone have been about it. “If it gets refused well just scale back our 5G roll out and this will hurt the country” – Only one they’d be hurting is themselves as people leave for EE, O2 and Three!
Again childish behaviour from Unite, anyone would think they didn’t have a agenda against improving mobile connectivity with suspect claims of national security risks.
Govt should steam roller over the lot of them and push though the investment.
While I’d agree that the security concerns are a bit off (CK not only owns 3 but also many utility networks and ports alongside 100% ownership of today’s 3, so it’s unclear how temporarily owning a bit of Voda3 is such a big deal), it’s bold of you to think the promised investment would materialise.
If the government can get Voda3 to provide a cast iron legal commitment (with actual punitive measures if they fail) then that’s one thing, but promises are quite another.
Won’t there also be job losses if Three exit the UK market which is likely if this doesn’t go through?
I’m mixed on this. The lack of competition I don’t get however – there are loads of MVNO network providers! We could probably all name at least 5-10.
I think the climate has also got to the point where having four main network providers each needing to fund the constant demand for connectivity, is not becoming financially viable.
I feel we should have welcomed Three with better open arms, but despite their best efforts with aggressive pricing, they haven’t been the success that they hoped for.
Yes, broadly I agree.
I find it oddly fascinating that people who really should know better seem to think that forcing Three to remain independent while actively blocking any attempt by Three to improve their lot as an independent entity is a sustainable position for a prolonged period of time.
I also agree on competition – the UK has numerous MVNOs, most of which (ones which are not owned by the parent network anyway) are on Vodafone EE or O2 (Three’s biggest MVNO which it doesn’t own being iD Mobile).
As for pricing – there may be an argument there. If this goes through, I wouldn’t be surprised to see pricing on the parent brand go up, and I don’t think anyone else would be either. Having said that, if pricing was a deal breaker for people then, while Voxi Talkmobile and Smarty (and iD Mobile too for completeness) all exist, why do people continue to go to the parent network?
Overall though I’m a bit leery about this. Vodafone (rather than Three) being in charge of network investment in my area is not a good thing – they’ve made a disgrace of themselves in the local paper about it several times, so much so that last time it happened the local paper’s website left comments on… Hmm. That being said, if it’s this or nothing then this may be the lesser of two evils.
The U.K do have a load of MVNOs, but they all work on the same networks, but if there is less competition in the physical network, then the companies that run the MVNOs will not be able to negotiate better deals, so we the consumer will still lose out as prices rise. this is the same problem we have with fixed line broadband, since Openreach is the main network provider, everything has to go through them, so they can charge what they like to wholesale. Thankfully that is changing due to Alt nets
i don’t want to be gobbled up by vodafone, they say it is a merger, but for how long?
Three have said they will exit the UK market eventually so it will happen at some point.
Unfortunately, Vodafone and Three are in a very tricky situation now, as the previous mergers of EE and BT, as well as O2 and Virgin Media (which the CMA did see fit to go ahead) has created a market where the two largest players massively outclass the other two, benefiting from the synergies of their fixed and wireless networks and ability to sell “Quad play services” (mobile, internet, landline and television). Which neither Three nor Vodafone (or any of the MVNOs) are able to realistically do, due to their lack of fixed broadband infrastructure.
I suspect this move will, ironically, probably end up enormously consolidating the market (therefore hurting competition), as consumers increasingly find their mobile and broadband services merged into one single product.
➤ On top of this, price levels in European markets with only three mobile network operators (MNOs) are 20% higher on average than those with four.
Yes unite but the fact is this, in the UK the mobile industry is a race to the bottom. Everyone wants unlimited data, blanket coverage and blazing fast speeds. Very few people actually want to pay the price that kind of service deserves.
I’d happily pay Three £30 a month for unlimited data because in my area they are fantastic with blanket 5G coverage. I don’t find them bad while traveling now either. However, most people will jump on Smarty and get Unlimited for £18 or Scancom and get it for £10 a month…
I hope this merger gets rejected, I fail to see how it will be better for anyone other than shareholders in the long run.
Most of my family are on Smarty & Voxi, guaranteed one will be eliminated, the other will hike prices / lower data. An absolute disaster scenario if both are canned & we’re stuck with mergeco.
Security concerns could be eased if Vodafone fully buys out Three UK without any ownership by CK Hutchison.
However the takeover should ban compulsory redundancies in Vodafone for a minimum of 2 years and implement a price freeze for 2 years.
Think I’d have to agree with this sentiment.
The less CK Group tentacles coming into UK the better really.
Yes, it must be awfully embarrassing for GCHQ to have to go to a Chinese owned company and ask their permission to spy on UK citizens.
Vodafone can’t afford to take the debt on required for that, hence why there’s stock options to do it later.
But honestly, the more Chinese involvement in the UK the better. Actual competition instead of resting on laurels and rinsing a market