Britain approves US$19 billion Vodafone-Three mobile merger
The two companies pledged to invest in 5G networks and offer protection for retail and wholesale customers
BRITAIN on Thursday (Dec 5) approved Vodafone’s US$19 billion merger with Hutchison’s Three UK to create the country’s biggest mobile operator after their investment promises outweighed concerns about higher customer bills.
The Competition and Markets Authority (CMA) had said the deal could push up prices, but it accepted a pledge by the two companies to invest in 5G networks and offer protection for retail and wholesale customers.
“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 agree to implement our proposed measures,” it said.
The approval follows a demand by Prime Minister Keir Starmer for regulators to put economic growth at the forefront of their thinking, and marks a major shift in the CMA’s belief that four operators were needed to ensure competition and keep consumer bills low.
Vodafone and Three have committed to spend US$14 billion to build a better 5G network that will serve 50 million customers, including the subscribers of Vodafone’s network sharing partner Virgin Media O2.
The CMA said the investment would boost competition between the three remaining networks, which includes current market leader BT, and eventually deliver a better service for customers.
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The combined group will also have to cap some SIM-only tariffs and offer set contract terms to mobile virtual operators, such as Tesco Mobile, Lebara and Sky, for three years.
Shares in Vodafone, which have more than halved in the last five years, were up 0.5 per cent at 70 pence in early trading.
Vodafone CEO Margherita Della Valle said the green light would unlock investment to build out Britain’s network infrastructure.
“Today’s approval releases the handbrake on the UK’s telecoms industry, and the increased investment will power the UK to the forefront of European telecommunications,” she said.
Analyst Karen Egan at Enders Analysis said the approval was the right outcome, with the alternative a slow painful retreat by Hutchison.
Hutchison had said it did not make a return on its capital in the British market, constraining its ability to invest in its network as the smallest operator.
“Three high quality networks instead of four inferior ones will serve consumers and businesses better, and the industry can move away from the low returns, low investment cycle that has dogged it,” Egan said.
Vodafone will own 51 per cent of the combined company and will have an option to buy the remainder after three years, subject to certain conditions. REUTERS
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