Vodafone has announced plans to cut 11,000 jobs as part of a turnaround plan from the company's newly appointed CEO Margherita Della Valle.
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Vodafone's proposed merger with rival CK Hutchison will face an in-depth investigation, unless mobile operators provide “meaningful solutions” to the regulator's concerns, the UK Competition and Markets Authority said on Friday.
Vodafone and British brand Three CK Hutchison have five working days to provide their answers.
The Capital Markets Authority opened an investigation into the proposed link last January. In its latest update on Friday, the CMA said it was concerned that the deal would significantly reduce competition, result in higher prices for consumers and create an unfavorable environment for mobile virtual network operators.
Mobile virtual network operators, or MVNOs, are a wave of new network operators that have emerged over the years that use underlying infrastructure from existing telecom companies, rather than building them from scratch.
The Vodafone and CK Hutchison deal, announced last year, will merge the two brands' UK businesses, giving Vodafone a 51% controlling stake and leaving CK Hutchison with a minority stake. Ahmed Essam, CEO of Vodafone UK, is set to lead the new company, while Darren Purkis, the UK's three chief financial officers, is set to take over as CFO.
High prices and low quality
The CMA said on Friday that the deal proposed by Vodafone and CK Hutchison could lead to higher prices and lower quality for UK mobile customers. The Capital Markets Authority said that Vodafone and 3 are among the four largest network providers in Britain and provide important alternatives to consumers.
The CMA noted that Three's network is generally the cheapest of the UK's big four mobile networks, and its combination with Vodafone could “reduce competition between mobile network operators to win new customers”.
The CMA also noted that it was concerned that the deal could make it more difficult for MVNOs such as Sky Mobile, Lebara and Lyca Mobile to negotiate good deals for their customers. Both Vodafone and Three are used by prominent MVNOs.
Lebara Mobile and Asda Mobile use Vodafone, while Superdrug Mobile are among the MVNO operators that use Three.
Vodafone and 3 said that the Capital Markets Authority’s announcement that it intends to refer the company’s deal with 3 for an in-depth review for the second phase was “an expected next step in the process and is in line with the time frame for completion that we set from the beginning.” “.
In a joint statement, the two companies said they remained confident that the deal would bring benefits to competition, customers and the UK.
They pointed to the quality of mobile phone network services in the United Kingdom. It lags significantly behind other European countries, and its networks are “substandard, unable to cover the cost of capital, and constrained in its ability to invest and compete effectively” against market leaders EE and Virgin Media O2 (VMO2).
Vodafone's Issam said on Friday that the deal “will create an operator of the scale needed to take on BTEE – referring to BT and its EE mobile brand – and VMO2, giving MVNOs greater choice in the wholesale market and in the broader interests of customers, competition and the country.”
Robert Finnegan, chief executive of Three UK, said the current market structure “is holding the UK back, which is not good for customers or competition”.
“By creating a third player with the scale necessary to invest, the combination of our two companies will provide one of the most advanced networks in Europe and move the UK onto the digital fast track, benefiting customers from day one,” Finnegan said.
