Vodafone-Three merger: Millions could see bills rise, warns watchdog

A proposed £15 billion merger between Vodafone and Three could lead to price hikes for millions of customers, the UK’s Competition and Markets Authority (CMA) has warned. 

The deal, which would create the UK’s largest mobile network with 27 million customers, has raised concerns over reduced services, such as smaller data packages, especially affecting low-income users.

Vodafone and Three propose £15 billion merger creating the UK’s largest mobile network

The CMA has been investigating the merger since its announcement last summer and is concerned it may lead to higher prices or worse service quality. 

The watchdog also noted that customers might end up paying for service improvements they don’t value, while virtual network operators like Sky Mobile, Lyca Mobile, and Lebara could face challenges if the number of major operators shrinks from four to three.

The Competition and Markets Authority are investigating the mobile network merger

Stuart McIntosh, head of the CMA inquiry, said, “We’ve taken a thorough, considered approach to investigating this merger, weighing up the investment the companies say they will make in enhancing network quality and boosting 5G connectivity against the significant costs to customers and rival virtual networks.”

The CMA is also sceptical of the firms’ promises to invest £11 billion into the UK’s mobile infrastructure post-merger, suggesting there may be little incentive to fulfil these commitments once the merger is completed.

However, Vodafone and Three argue that the merger will improve competition, drive investment, and enhance 5G rollout. 

The CEO’s of both Vodafone and Three argue for the proposed merger

Vodafone’s CEO Margherita Della Valle claims, “Our merger is a catalyst for change. It’s time to take off the handbrake on the country’s connectivity and build the world-class infrastructure the country deserves. We are offering a self-funded plan to propel economic growth and address the UK’s digital divide.”

Three UK’s CEO Robert Finnegan added that the UK’s current mobile market is “dysfunctional” and needs a shake-up to improve its underperforming digital infrastructure.

“The current UK four-player mobile market is dysfunctional and lacks quality competition with two strong players and two weak players,” stated Finnegan, “This is reflected in the current state of the UK’s digital infrastructure that everyone agrees falls well short of what the country needs and deserve.”

Vodafone and Three have until December to address the concerns of the CMA

The companies have until December to address the CMA’s concerns before a final decision is made. 

The regulator said, “The CMA will retain the option to prohibit the merger should it conclude that other remedy options will not address its competition concerns effectively.”

They dispute claims that the merger will raise prices, arguing instead that prices could stay the same or even decrease as a result.

Both firms maintain that the deal will fix issues in the UK’s mobile market and boost competition.

The firms also emphasised that the proposal was not a final decision and that they plan on working with the CMA to reassure it of the firms plans and secure approval.

This ongoing debate will be crucial for Vodafone and Three customers, as well as the broader mobile industry.