The UK Competition and Markets Authority (CMA) has expressed concerns about the proposed merger between Vodafone and Three, stating that it could lead to higher prices and reduced services for millions of customers.
The merger, which would create the UK’s largest mobile operator with a combined customer base of 27 million, could result in customers facing smaller data packages and potentially higher bills, according to the CMA’s investigation. The authority is particularly concerned about the impact on vulnerable customers who may be least able to afford increased costs.
The CMA also highlighted the potential negative consequences for mobile virtual network operators (MVNOs), which rely on existing network operators like Vodafone and Three to provide their services. A reduced number of network operators could make it more difficult for MVNOs to secure competitive terms, which could ultimately lead to higher prices for their customers.
Vodafone and Three announced their plans to merge their UK operations in October 2022, citing the potential benefits of accelerated 5G rollout and expanded broadband connectivity. However, the CMA’s investigation has revealed that these benefits may be overstated and that the merged firm may not have sufficient incentives to follow through on its proposed investment program.
While the CMA has provisionally found that the merger would lead to a significant lessening of competition, it is exploring potential solutions to address its concerns. The authority will consider how Vodafone and Three can mitigate the negative impact on customers while securing the potential long-term benefits of the merger, including through guarantees for future network investments.
The CMA is expected to announce its final decision on the Vodafone-Three merger by 7th December 2024.
