Vodafone and Three have expressed disagreement with findings of the UK’s Competition and Markets Authority (CMA) regarding their proposed merger, emphasizing several key points where they believe the CMA’s analysis is flawed.
UK has four mobile network operators: Vodafone, Three, BTEE and Virgin Media O2. In addition, UK has MVNOs such as Sky Mobile, Tesco Mobile, Lebara and Lyca Mobile. CMA said the merger will reduce competition, increase price and cut investment.
Vodafone and Three said the $19 billion merger in order to bring their 27 million mobile phone customers under one company will resolve structural issues in the UK mobile market, improve network quality, and lead to greater competition, rather than the price increases and market dominance that the CMA suggests.
Stuart McIntosh, chair of the inquiry group, said: “We will consider how Vodafone and Three might address our concerns about the likely impact of the merger on retail and wholesale customers while securing the longer-term benefits of the merger, including by guaranteeing future network investments.”
Key Points of Disagreement:
5G Infrastructure and Investment: Vodafone and Three argue that their merger would transform the UK’s lagging mobile market, particularly in 5G availability and speed, where the country currently ranks poorly compared to other European nations. They highlight that the UK’s current mobile network is among the slowest in the G7. The companies see the merger as a catalyst for significantly upgrading the nation’s 5G infrastructure, delivering high-quality connectivity to underserved areas, such as schools and hospitals.
The companies assert that this investment would not only improve their own network but also benefit 50 million mobile customers across the country, including those of competitor VMO2. They believe this enhanced network would provide a substantial increase in quality and coverage.
Impact on Pricing: One of the most significant areas of disagreement is around pricing. The CMA’s provisional findings suggest that the merger could lead to higher prices for consumers, but Vodafone and Three strongly contest this. They argue that their business model is not based on price hikes, and that competitive pressures post-merger, particularly from Mobile Virtual Network Operators (MVNOs), would help keep prices stable or even reduce them.
Wholesale Market Concerns: The CMA has expressed concerns about the impact of the merger on the wholesale market, particularly for MVNOs. Vodafone and Three counter this by stating that their merger would actually boost competition by offering more robust wholesale options, thus giving MVNOs better choices and higher quality networks. They believe that a stronger combined network would enhance competition rather than harm it.
Market Dysfunction: Both companies agree that the current four-player mobile market in the UK is dysfunctional, with two strong players and two weaker ones. They argue that the merger would address this imbalance, creating a more competitive and dynamic market.
Robert Finnegan, CEO of Three UK, emphasizes that the UK’s digital infrastructure is not up to the standard the country requires and deserves, and the merger is necessary to change this.
Commitment to Investment: Vodafone and Three have also highlighted their £11 billion investment plan as a key benefit of the merger, which they claim will unlock significant growth opportunities for the UK economy and help bridge the digital divide. The companies are willing to have this investment independently monitored and enforced by Ofcom to ensure the benefits materialize.
Overall, Vodafone and Three maintain that the merger is in the best interest of UK consumers, businesses, and the broader economy. They intend to continue working with the CMA to address outstanding concerns and demonstrate that the merger will deliver on its promises of better connectivity, increased competition, and investment in the country’s digital future.
Baburajan Kizhakedath
