Vodafone and Three hit back after CMA ruling delays merger

A mobile phone showing the Vodafone logo
(Image credit: Rafapress / Shutterstock)

Vodafone and Three have slammed plans by the UK's Competition and Markets Authority (CMA) to launch a further antitrust investigation into their planned £15bn/$19bn merger.

The CMA has announced "an in-depth, phase 2 investigation" into the deal having uncovered concerns that consumers and businesses alike could be left worse off by rising bills caused by the merger.

The moves come after the body completed its initial Phase 1 investigation, which looked to identify whether the deal may lead to a "substantial lessening of competition" in the UK market, particularly for smaller MVNOs, who the CMA says may find it harder to negotiate good deals for their customers as the number of operators able to offer such virtual services shrinks.

CMA probes Vodafone-Three merger

"Millions of people in the UK depend on effective competition in the mobile market in order to access the best deals for them," said Julie Bon, the CMA Phase 1 decisionmaker for the case.

"Whilst Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims. Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks. These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions."

In a statement, the two networks said although the CMA's move was expected, they remained confident the merger will deliver "significant benefits for competition, customers and the country."

Vodafone UK CEO, Ahmed Essam, said his company looked forward to working with the CMA on the Phase 2 process as the merger reaches an "important milestone".

"By merging our two companies, we will be able to invest £11 billion to help the UK realise its ambitions to be a world leader in next-generation 5G technology, and increase competition across the industry," Essam added.

"This transaction will create an operator with the scale required to take on BTEE and VMO2, give MVNOs greater choice in the wholesale market and is in the wider interests of customers, competition and the country."

"The current market structure is holding the UK back, which is not good for customers or competition," added Three UK CEO, Robert Finnegan.

"By creating a third player with the necessary scale to invest, the combination of our two companies will deliver one of Europe's most advanced networks and move the UK into the digital fast lane, benefiting customers from Day One."

The merger was announced in June 2023, with plans to form a new £15bn-valued telco giant and "create one of Europe's leading 5G networks."

Vodafone was set to be the slight majority owner of the new combined group, currently known as MergeCo, controlling 51%, with CK Hutchinson keeping the remaining 49%. 

The two companies were also keen to highlight the advantages of combining their two 5G networks for consumers and businesses alike, with MergeCo intending to invest over £6 billion in the first five years, and £11 billion over a ten year plan, to create a best-in-class 5G network, supporting between 8,000 and 12,000 new jobs in the wider economy.

MergeCo also expects to deliver up to £5 billion per year in UK economic benefit by 2030, supporting the digital transformation for schools, hospitals and businesses, with its standalone 5G network will cover every school and hospital in the UK by 2030, helping deliver the Government’s stretch ambition as set out in the Wireless Infrastructure Strategy.

Mike Moore
Deputy Editor, TechRadar Pro

Mike Moore is Deputy Editor at TechRadar Pro. He has worked as a B2B and B2C tech journalist for nearly a decade, including at one of the UK's leading national newspapers and fellow Future title ITProPortal, and when he's not keeping track of all the latest enterprise and workplace trends, can most likely be found watching, following or taking part in some kind of sport.