A pedestrian walks past a Vodafone store in central London on May 16, 2023. British mobile giant Vodafone plans to cut 11,000 jobs over three years in the latest cull to hit the technology sector, with new boss Margherita della Valle criticizing recent performance.
Adrian Dennis | AFP | Getty Images
Today, Thursday, the British Competition Regulatory Authority approved the merger between the two telecommunications companies, Vodafone, and Three in the United Kingdom, under certain conditions.
The Competition and Markets Authority (CMA) said the £15 billion ($19 billion) partnership should be allowed to proceed if the two companies sign “binding commitments to invest billions” to roll out a joint 5G network across the UK.
The combined entity will also be required to cap certain mobile tariffs and “offer pre-defined contractual terms” to so-called mobile virtual network operators (MVNOs) – mobile network operators that rely on another company's network.
Vodafone and CK Hutchison, owner of the Three UK network, announced the deal last year. The deal, which has now been agreed, will merge the two brands' UK businesses, giving Vodafone a 51% controlling stake and leaving CK Hutchison with a minority stake.
“This massive merger represents one of the most important moments in UK mobile history, heralding the arrival of a new market leader with a combined 29 million customers,” Kester Mann, director of consumer and communications at CCS Insight, said in a report. Note on Thursday.
“The outcome – after months of intense regulatory scrutiny – was as good as Vodafone and 3 could have been. Not only did they receive approval, but the treatments and commitments agreed were less difficult than feared.”
The CMA's decision comes after it opened an antitrust investigation into the deal in January, and announced an in-depth investigation in April. Last month, the competition watchdog set out a path forward for the deal, if certain solutions are adopted.
The regulatory body expressed concern that the merger, which would reduce the number of major players in telecom networks from four to three, would lead to higher prices or a decline in services.
Vodafone said the deal is expected to be officially completed in the first half of 2025.
“Today’s decision creates new strength in the UK telecoms market and unlocks the investment needed to build the network infrastructure the country deserves,” Vodafone CEO Margherita Della Valle said in a press release.
The CMA requires commitments
The legally binding commitments require Vodafone and Three to build out their 5G network over the next eight years.
Vodafone previously said the combined entity would invest £11 billion in UK telecoms infrastructure.
The new company will also need to cap mobile phone tariffs and data plans for three years, as well as offer pre-set rates and contract terms for wholesale services to MVNOs.
These terms will be supervised by the Capital Markets Authority and Ofcom.
“Having carefully considered the evidence, as well as the comprehensive feedback we have received, we believe that the merger is likely to enhance competition in the UK mobile sector and should be allowed to go ahead – but only if Vodafone and Three agree to implement our proposed actions,” said Stuart McIntosh. Head of the Independent Investigation Group leading the investigation into the Capital Markets Authority, in a press release.
Paolo Pescatore, founder of PP Foresight, said it will take some time before the benefits of the deal are seen.
“A decision may have been made today but it is still a waiting game,” Pescatore said. “The bottom line is that it will take many years before the full benefits of the deal are realized, and there are a lot of difficult decisions ahead of us.”
