Vodafone and Three have outlined significant commitments in response to concerns raised by the UK Competition and Markets Authority (CMA) regarding their proposed merger. Both companies strongly assert that the merger is pro-competitive and will lead to enhanced digital infrastructure in the UK.
The deal between Vodafone and Three — valued at £15 billion or $18.8 billion — will give Vodafone a 51 percent stake in the combined company, while CK Hutchison’s Three will own 49 percent.
The merger is expected to create the UK’s largest telecommunications company, with over 27 million customers. Vodafone has less than 20 percent share in the UK telecom market. Three has less than 10 percent share.
Vodafone and Three compete with leading telecom operators such as BT-owned EE and Virgin Media O2, a joint venture between Liberty Global and Telefonica, in the UK. In addition, there are MVNOs who rely on leading telecom operators for mobile network. Approximately 90 percent of MVNO customers are currently on BT EE or Virgin Media-O2 networks.
Key Commitments:
Vodafone and Three have already pledged to invest £11 billion in network infrastructure, aiming to create one of Europe’s most advanced networks. They are open to having this commitment enforced by Ofcom, ensuring long-term benefits for consumers. This is a new offer from Vodafone and Three.
The companies plan to extend the benefits of their enhanced network not only to their customers but also to those of Virgin Media O2 (VMO2) and its mobile virtual network operator (MVNO) partners. This agreement includes selling spectrum to VMO2, which will improve network quality, capacity, and coverage for over 50 million mobile users across the UK. This is a new offer from Vodafone and Three.
To address retail price concerns, Vodafone and Three have pledged to maintain tariffs at £10 or below for value-focused customers using the SMARTY brand for two years following the merger. They will also offer social tariffs through both the SMARTY and VOXI 4 Now brands and continue supporting vulnerable customers. This is a new offer from Vodafone and Three.
Vodafone and Three will encourage mobile virtual network operators (MVNOs) to leverage their expanded network capacity, helping MVNOs offer competitive deals to their customers. This is aimed at fostering competition in the wholesale market. This is a new offer from Vodafone and Three.
Vodafone and Three disagree with the CMA’s provisional findings that the merger could lead to price increases, asserting that their merger will spur growth, investment, and competitiveness. They maintain that the merger will transform the UK’s digital infrastructure, supporting sectors such as education, healthcare, and businesses.
The final decision from the CMA is expected by December 7, with Vodafone and Three expressing confidence that their commitments will address the CMA’s concerns and lead to approval.
Existing offers
By combining networks, network capacity will almost double compared to the two companies on a standalone basis.
MergeCo will invest over £6 billion in the first five years, and £11 billion over a ten-year plan, to create 5G network, supporting between 8,000 and 12,000 new jobs.
MergeCo expects to reach over 99 percent UK population coverage with a 5G standalone network by 2034.
There will be an up-to six-fold increase in data speeds for customers by 2034.
Baburajan Kizhakedath
