Merger of Vodafone and Three UK approved

Vodafone and Three UK have finally gained approval for their merger after first announcing their plans 18 months ago.

They will become one mobile network operator within the next three to six months, with CK Hutchison taking 49%, while Vodafone will own 51%.

The merger will be proceeding subject to legally binding commitments however, to minimise issues raised around lessening of competition.

Credit: kailim/Shutterstock.com

Merger commitments

18 months after initially being announced in June 2023, the Vodafone and Three UK merger has finally received approval from the CMA.

The merger will see Three UK and Vodafone combine businesses, with CK Hutchinson (Three UK) keeping a 49% share, while Vodafone will own a 51% share.

The new combined mobile network will become the UK's third network operator, with only Virgin Media O2 and BT Group's EE remaining.

As a result of concerns over reduced competition, the CMA has secured a number of legally binding commitments from the duo in order to help protect both retail and wholesale customers, which include:

• Delivering their joint network plan with an investment of £11 billion into a new advanced 5G network over the next 8 years
• Cap selected mobile tariffs and data plans for 3 years - protecting retail customers from price rises
• Offer pre-set prices and terms for wholesale services for 3 years - to ensure mobile virtual network operators (MVNO's) have competitive terms and conditions

Vodafone and Three UK's mobile network upgrade, integration and improvement plan will be overseen by both Ofcom and the CMA, and will require an annual report to be published detailing their progress.

The CMA will also monitor and enforce the commitments around pricing on both retail tariffs and wholesale terms.

Stuart McIntosh, chair of the independent inquiry group leading the investigation, said, "It's crucial this merger doesn't harm competition, which is why we've spent time considering how it could impact the telecoms market.

"Having carefully considered the evidence, as well as the extensive feedback we have received, we believe 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.

"Both Ofcom and the CMA would oversee the implementation of these legally binding commitments, which would help enhance the UK's 5G capability whilst preserving effective competition in the sector."

Concerns

When the CMA concluded its Phase 1 investigation into the merger of Vodafone and Three UK in March 2024, it raised concerns the deal could lead to higher prices for consumers.

Combining two of the UK's four mobile network operators could "substantially" reduce market competition say the CMA, with Three UK currently offering some of the cheapest prices.

There is also concern that MVNO's, such as Sky Mobile, Lebara and Lyca Mobile will struggle to remain competitive with fewer operator deals available to choose between.

Subsequently, Sky even warned the CMA as recently as November 2024 they would consider taking legal action if the merger was allowed to go ahead if significant changes to the proposed remedies weren't improved upon.

Sky said, "it is evident that many others have raised similar substantial concerns and if the CMA do not make several key improvements to the remedy, Sky, among possibly others, will be forced to consider appealing the decision".

The MVNO wanted wholesale terms extended to four years instead of three; lower unlimited pricing at the wholesale level; removal of a wholesale premium on plans with speeds above 150Mbps; and the option to extend the wholesale terms for an additional five years.

None of these requisites have been met by the commitments agreed to by the CMA, so it will be interesting to see if Sky follow through on their complaint.