LONDON, Sept 12 (Askume) – Vodafone’s (VOD.L) merger with 3 UK is likely to get regulatory approval if it can provide guarantees the $19 billion deal will be good for consumption, Britain’s competition watchdog on operators, network quality and
The Competition and Markets Authority (CMA) said in its provisional findings that moving from four national networks to three could add millions of dollars to bills.
But he also said the agreement could improve networks and speed up the transition to next-generation 5G. He also said they would work on a solution before making a final decision in December.
The alliance between three British companies owned by Vodafone and Hong Kong’s CK Hutchison Holdings (0001.HK), announced 15 months ago, challenged the regulator’s previous stance that four networks were needed to keep prices low.
Both players believe the deal will create a stronger third player that can compete more effectively with market leaders BT’s EE and Virgin Media’s O2.
CMA investigation chair Stuart Mackintosh said: “We will now consider how Vodafone and Three address our concerns about the potential impact of the merger on retail and wholesale customers, as well as the potential long-term benefits of the merger, including securing future network investment.”
Vodafone and Three said they disagreed with the view that the deal would raise competition concerns and could result in higher prices for customers.
“This is not a final decision and we look forward to working with the CMA to seek approval,” they said in a joint statement.
Cast Iron Promise
Vodafone Chief Executive Margherita Della Valle said she was confident the companies could address the CMA’s concerns.
The CMA said it could still block the deal or force the companies to sell mobile assets or spectrum (known as structural measures), but such a move would eliminate or reduce any benefits.
“I think it is fair to say that the CMA completely rejects these kind of structural measures,” Della Valle told reporters.
Analysts at Barclays said the measures recommended by the CMA look “generally manageable”.
The CMA said this could require investment from networks and a commitment to protecting customers, such as allowing them to “extend” existing terms for a period of time.
In the wholesale market, third-party providers such as Lyca Mobile, Sky Mobile and Lebara may offer pre-agreed terms, he said.
It added that providers currently mainly using the EE and O2 networks could also take up a larger share of the combined company’s capacity.
Della Valle said the companies’ plan to invest £11 billion in the network was a “firm commitment” and that consumer prices would be low or stable because the integrated network would favour wholesale competition.
Vodafone shares rose 1% in early trade.
