Vodafone-Big Three merger can go ahead after regulator outlines remedies | Real Time Headlines

LONDON – The multi-billion pound merger of British telecoms companies Vodafone and Three could go ahead if the two companies adopt a series of proposed remedies to address competition concerns, regulators said on Tuesday.

The Competition and Markets Authority said in a statement that if Vodafone and Hong Kong-based CK Hutchison Three continue to invest billions of pounds in British telecoms infrastructure and increase short-term investments, the 15 billion pounds ($19.5 billion) The transaction may be approved.

Vodafone has previously said the combined entity would invest 11 billion pounds ($14.46 billion) in UK telecoms infrastructure.

Conditions required for the transaction to close include:

• A legally enforceable commitment overseen by telecoms regulator Ofcom and the CMA to deliver a joint plan to upgrade and improve the UK’s networks over the next eight years
• Maintain certain existing mobile tariffs and data plans for current and future Vodafone and three customers (including its sub-brands) for at least three years
• Pre-agreed pricing and contract terms to ensure mobile virtual network operators (MVNOs) – operators using third-party operator network infrastructure – can still receive competitive wholesale deals

Stuart McIntosh, chairman of the CMA’s investigative panel, which is leading the inquiry, said the regulator believed Vodafone’s merger with the Big Three could be “good for competition in the UK mobile industry” if its concerns were addressed.

“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale suppliers will address our concerns while retaining the benefits of this merger,” McIntosh said in a statement on Tuesday.

A Vodafone spokesperson told CNBC via email on Tuesday that Vodafone and Three believe the CMA’s remediation framework “provides a path to final approval.”

A Vodafone spokesman said: “This merger will be a catalyst for positive change. It will deliver significant benefits to businesses and consumers across the UK and will bring advanced 5G to every school and hospital across the country.”

The CMA said a final decision on its merger would be made by December 7.

The CMA provisionally found in September that Vodafone’s merger with the Big Three could lead to higher prices for customers and harm competition among MVNOs such as Sky Mobile, Lyca, Lebara and iD Mobile. Following the provisional findings, the regulator consulted on possible solutions to address its concerns.

In June last year, Vodafone first announced an agreement with CK Hutchison to merge the three companies. Vodafone will own 51% of the combined business, with the remainder reserved to CK Hutchison.

The deal marks one of the UK’s first major telecoms consolidation efforts in years and will reduce the number of mobile operators in the country to just three.

Vodafone and Three trail larger rivals EE, which was acquired by BT in 2016, as well as Telefonica and Liberty Global’s O2.

Vodafone argued the deal was justified because Britain’s digital infrastructure lags behind other major economies, stressing the need for increased investment in areas such as next-generation 5G networks and expanded coverage in more parts of the country.

Vodafone also said it disagreed with the CMA’s previous findings that the merger would lead to higher prices for consumers. The company said the merger would not adopt a pricing strategy and would increase competition among mobile virtual network operators (MVNOs).

Kester Mann, head of consumer and connectivity at technology research firm CCS Insight, said Tuesday’s announcement by the CMA marked a “big step” forward for the two telecoms giants in completing their merger deal.

“The approval would mark one of the most significant developments in UK mobile history and herald the arrival of a new market leader with more than 29 million customers,” Mann said in emailed comments.

Mann added: “The regulator’s announcement will not be welcomed by everyone. BT and Sky Mobile are strongly opposed to the deal and may make a last strong attempt to block it before the CMA’s deadline of less than five weeks.” .

BT, the UK’s largest telecommunications network provider, Already said before The proposed merger would create an entity with “a disproportionate share of capacity and spectrum that is unprecedented in the UK and Western European mobile markets”.

BT said it believed the deal would “significantly reduce competition and discourage investment”.