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Vodafone (LSE:VOD) and Three UK have voiced strong opposition to the Competition and Markets Authority's (CMA) provisional findings regarding their proposed merger. The companies argue that the merger represents a unique opportunity to revolutionize the UK’s digital infrastructure, with a planned £11 billion investment aimed at significantly enhancing the country’s mobile network capabilities.
Disagreement with CMA’s Provisional Findings
Vodafone and Three UK disagree with the CMA's provisional findings, which suggest that the merger could raise competition concerns and potentially lead to higher prices for consumers. The companies contend that the merger is fundamentally pro-growth, pro-customer, and pro-competition, and they believe it should be approved by the CMA.
Improving Network Quality and 5G Availability
According to Opensignal analysis, the UK currently ranks 22nd out of 25 European countries for 5G availability and speed, with the slowest data speeds among the G7 nations. Vodafone and Three argue that their merger would address these deficiencies, bringing high-quality 5G services to all communities, schools, and hospitals in the country. They also point out that the CMA acknowledges the merger would improve network quality. The companies are committed to demonstrating that the merged entity will fully deliver on its network investment commitments.
Impact on Pricing
The companies dispute the CMA’s provisional finding that the merger could lead to higher prices. Vodafone and Three assert that their pricing strategy will remain unchanged and that all social tariffs will continue to safeguard vulnerable customers. They emphasize that the merger's investment case does not rely on hypothetical price increases, and argue that prices could either remain stable or decrease due to enhanced competitive pressures from Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs).
MVNOs and Wholesale Market
Vodafone and Three also contest the CMA’s concerns regarding the impact on the wholesale market. They note that 90% of the UK’s MVNOs currently rely on either VMO2 or BT EE for wholesale services. The companies believe that a stronger, combined network would boost competition in the wholesale market by offering MVNOs more choice and better service quality from three major wholesale network providers.
Next Steps and CMA Engagement
The companies are reviewing the CMA’s Notice of Possible Remedies and are eager to engage constructively to address the concerns raised. They are confident that they can resolve the issues and remain committed to their £11 billion investment plan. Vodafone and Three propose that this commitment be independently monitored and enforced by Ofcom to ensure the transaction's benefits are realized.
