Vodafone and Three are addressing the concerns raised by the CMA regarding their proposed £15bn merger. In response to potential issues, the companies have presented new remedies to alleviate the regulator’s apprehensions.
The CMA previously warned that millions of UK mobile customers could face higher prices and reduced service options if the merger proceeds. Nevertheless, Vodafone and Three remain confident that their proposed concessions will address these issues and ensure a competitive market.
Vodafone and Three are challenging the regulator’s unease regarding their proposed £15bn merger, asserting that “outstanding issues can be resolved”. This follows recent deliberations by the Competition and Markets Authority (CMA). The telecom giants disclosed today that they “remain confident” about the transaction that would merge two of Britain’s major mobile network operators.
Earlier in March, the CMA expressed concern about possible price surges for mobile users and a reduction in service options, highlighting smaller data packages as an example. The regulatory body also had particular concerns about how vulnerable customers might be disproportionately affected.
Vodafone and Three have reiterated their stance, introducing two additional concessions to alleviate the CMA’s apprehensions.
These new promises include commitments to lock prices at £10 or less for budget-conscious consumers and to persist with social tariffs under the SMARTY and VOXI 4 Now brands.
The companies had previously pledged a legally binding £11bn investment in digital infrastructure, overseen by Ofcom.
Additionally, they renewed their network-sharing agreement with Virgin Media O2. They argue that these commitments will ensure robust competition among the sector’s three largest players: Vodafone-Three, BT/EE, and Virgin Media O2.
Vodafone also confirmed today that due to changes in the UK Listing Rules (UKLRs) earlier this year, shareholder approval is no longer necessary.
Further concessions target mobile virtual network operators (MVNOs), like Giffgaff.
Vodafone and Three suggest a deal aimed at enticing MVNOs to capitalise on the increased network capacity that could arise post-merger, ensuring smaller operators benefit from improved service capabilities.
Prominent telecoms analyst Paolo Pescatore commented that it is not surprising that Vodafone and Three are holding their ground. Nevertheless, he finds it promising that both are closely collaborating on the new commitments.
“It remains to be seen if the entity has done enough on pricing to ease the CMA’s concerns. This could be a sticking point that makes or breaks it. A path to approval exists which is key for all parties,” added Pescatore.
The future of the deal now rests with the CMA, which has until 7 December to make a decision.
The new remedies proposed by Vodafone and Three aim to address the CMA’s concerns by ensuring competitive pricing and enhanced service options. Their strategic investment in digital infrastructure and focus on concessions for social tariffs and MVNOs demonstrate their commitment to a fair market.
It remains to be seen if these efforts will suffice in securing approval from the CMA. However, the collaborative approach and substantial commitments from both companies indicate a strong desire to move forward with the merger.
