UK’s CMA Approves Vodafone-Three UK Merger

The UK’s Competition and Markets Authority (CMA) on Thursday cleared the $20.99 billion Vodafone UK’s merger with Hutchison 3G UK, trading as Three UK, on the condition that both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK.

The merger is expected to be completed in the first half of 2025. Vodafone will own 51% of the equity and, after three years following completion and subject to certain conditions, Vodafone may acquire Hutchison’s 49% stake via a Put and Call option.

The network commitment would be supported by shorter term customer protections which would require the merged company to cap certain mobile tariffs and offer pre-set contractual terms to mobile virtual network operators, for a period of three years.

In September, the independent inquiry group leading the in-depth Phase 2 investigation of the merger provisionally found it could lead to higher prices for customers and less advantageous terms for virtual network providers (which depend on networks like those provided by Vodafone and Three to supply their own retail customers).

Since publishing those findings, the group has explored how its concerns might be resolved and in November published a remedies working paper which included a range of potential remedy options. The group has since analysed responses to the working paper and closely engaged with respondents. The group has also sought further input from Ofcom, the communications regulator.

The merger will therefore be allowed to proceed subject to the following legally binding commitments which require delivery of the joint network plan, which sets out the network upgrade, integration and improvements Vodafone and Three will make to their combined network across the UK over the next eight years.

The group has concluded that by significantly improving the quality of the combined network, the full implementation of this plan would boost competition between the mobile network operators in the long term, benefiting millions of people who rely on mobile services.

Capping selected mobile tariffs and data plans for three years, directly protecting large numbers of Vodafone/Three customers from short-term price rises in the early years of the network plan.

Offering pre-set prices and contract terms for wholesale services (again for three years) to ensure that virtual network providers can obtain competitive terms and conditions as the network plan is rolled out.

CMA’s Decision Welcomed

Vodafone and Three welcome the announcement by the UK’s CMA, which undertook 18 months of detailed and thorough analysis. The merger is a once-in-a-generation opportunity to transform the UK’s digital infrastructure.

From the outset, Margherita Della Valle, Vodafone Group’s CEO, described the combination as being, “great for customers, great for competition and great for the country.” Upon completion, this promise can be turned into reality.

Vodafone and Three have committed to invest $13.99 billion to create one of Europe’s most advanced 5G networks. The new network will reach 99% of the population and benefit over 50 million customers, through significantly better quality, greater reliability and enhanced capacity for handling ever-increasing data demand. This demand is set to accelerate further with more widespread adoption of new technology, such as AI.