Britain’s Competition and Markets Authority (CMA) has approved Vodafone’s $19 billion merger with Hutchison’s Three UK, paving the way for the creation of the country’s largest mobile operator. The CMA determined that the merger’s long-term investment benefits outweighed concerns over potential increases in customer bills, reversing earlier objections.
The decision marks a significant shift in regulatory policy, as this is the first major European market merger reducing the number of operators from four to three without requiring the establishment of new competitors to maintain price pressure.
Investment Pledge Drives Approval
Vodafone and Three, ranked third and fourth in the UK mobile market, committed to a £11 billion ($14 billion) investment in a 5G network to serve 50 million customers. This promise includes customers of Vodafone’s network-sharing partner, Virgin Media O2 (VM O2).
The companies also agreed to sell spectrum to VM O2, cap certain tariffs, and provide set terms for mobile virtual network operators. The CMA concluded that three robust operators—Vodafone-Three, BT, and VM O2—would ensure sufficient competition and improved service quality.
“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 implement our proposed measures,” the CMA stated.
Boost for UK Connectivity
Vodafone CEO Margherita Della Valle emphasized the deal’s potential to enhance connectivity, foster competition, and stimulate economic growth. “Advanced 5G is crucial for the growth of the UK’s science and technology sectors,” she said.
The merger comes as Britain struggles with some of the slowest mobile speeds in Europe. Operators have long argued that a regulatory emphasis on low prices has stifled investment, leaving Europe behind the US and Asia in digital infrastructure development.
Industry Implications
Analysts and industry leaders welcomed the approval. Karen Egan of Enders Analysis noted that the merger allows for “three high-quality networks instead of four inferior ones,” breaking a cycle of low investment and returns that has hindered the sector.
Vodafone, which will hold a 51% stake in the combined entity, has the option to acquire the remaining 49% from Hutchison after three years, subject to specific conditions.
