What the Vodafone-Three £16bn merger means for customers
Plans for the UK’s biggest mobile network with 27 million customers have been given the go-ahead despite concerns it could lessen competition and drive up bills for mobile users .
The £16.5bn deal can proceed if both companies agree to invest billions to boost Britain’s 5G network as well as place a cap on some mobile tariffs and data for at least three years to protect customers from “short-term” price rises.
The CMA said the investment would boost competition between the three remaining networks, which includes current market leader BT and deliver a better service for mobile users.
The Competition and Markets Authority (CMA) previously said the deal could push up customer prices leading to higher bills for tens of millions of customers, but it has now accepted that a pledge by the two companies to invest in 5G networks and offer protections for retail and wholesale customers were enough to ease its concerns.
Vodafone and Hutchinson, which owns Three, have promised to cap selected mobile tariffs and data plans for 3 years to protect them from short-term price rises during the initial stages of the merger.
It must also offer three-year preset prices and contract terms for wholesale services such as such as Sky Mobile, Tesco Mobile, Lyca Mobile, Lebara and iD Mobile who do not own their own networks and so rely on access to provide their own retail mobile services.
The CMA said the commitments were legally binding and will be monitored by both the CMA and Ofcom, the telecoms regulator. The merged company is required to publish an annual report setting out its progress.
The deal is also subject to the merged company setting up a national security committee within the merged business.
Stuart McIntosh, who led the CMA investigation into the merger said they concluded the merger is “likely to boost competition in the UK mobile sector and should be allowed to proceed – but only if Vodafone and Three agree to implement our proposed measures”.
Ofcom said it expects demand for mobile data to continue to grow to meet changing customer needs. Operating a mobile network involves high fixed costs and Ofcom said significant investment in mobile networks will be required to deploy the capacity needed to carry more mobile traffic, as well as in new technologies, including 5G standalone.
Vodafone and Three have committed to spend 11 billion pounds ($14 billion) to build a better 5G network that will serve 50 million customers, including the subscribers of Vodafone’s network sharing partner Virgin Media O2
Vodafone and Three have agreed to spend £11bn to build a better 5G network serving 50 million customers, including the subscribers of Vodafone’s network sharing partner Virgin Media O2.
Vodafone chief executive Margherita Della Valle said: “Today’s decision creates a new force in the UK’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves.
“Consumers and businesses will enjoy wider coverage, faster speeds and better-quality connections across the UK as we build the biggest and best network in our home market.
“Approval releases the handbrake on the UK’s telecoms industry, and the increased investment will power the UK to the forefront of European telecommunications.”
Canning Fok, deputy chairman of CK Hutchison, which owns Three UK, said: “We have been operating telecoms businesses in the UK for over three decades and Three UK for the past two.
“We have invested in the people and the infrastructure, helping to bring the benefits of mobile connectivity to UK businesses and consumers.
“When Three and Vodafone are combined, CK Hutchison will fully support the merged business in implementing its network investment plan, the cornerstone of today’s approval by the CMA (Competition and Markets Authority), transforming the UK’s digital infrastructure and ensuring customers across the country benefit from world-beating network quality.”