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The UK’s competition regulator has approved the £16.5bn merger of Vodafone’s domestic business with CK Hutchison’s Three UK, which is expected to create the operator Britain’s largest mobile phone.
The Competition and Markets Authority on Thursday said the deal would be allowed to go ahead if both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK and agree Protect customers in less time.
The CMA last month cleared the way for the tie-up after saying the deal could go ahead as long as the companies resolved competition concerns. The watchdog warned in September that the merger may result in higher bills for tens of millions of customers and required changes.
The tie-up, first announced in 2023, will reduce the number of operators in the UK from four to three.
Legally binding commitments require implementation of general network upgrades over the next eight years. Companies must also cap the prices of some mobile plans and data plans, as well as offer pre-set prices and contract terms for wholesale services over three years.
The use of such measures – known as behavioral remedies – instead of more drastic structural changes such as partial divestments of businesses is one Rare step for regulators.
Stuart McIntosh, chairman of the inquiry team leading the inquiry, said: “We believe the merger is likely to boost competition in the UK mobile sector and should be allowed to go ahead – but only if Vodafone and Three agrees to implement our proposed measures.”
The UK’s communications regulator Ofcom and the CMA will monitor the companies’ implementation of commitments to address the competition authority’s concerns. Companies have committed to investing £11 billion in the network.
In a joint statement, the companies welcomed the announcement and said the merger “creates a new force in the UK’s mobile sector, creating more competition and investment to transform the UK”. UK”. telecommunications scenery”.
When the deal was announced in June 2023, the companies said Vodafone would own 51% of the combined business with an option to buy CK Hutchison’s 49% stake after three years if the merged group reached enterprise value is £16.5 billion.
The UK’s competition regulator launched a formal investigation into the deal in January and began a full investigation in April.
The combination was approved by the UK government under the National Security and Investment Act in May with conditions, including the establishment of a national security committee within the merged enterprise.
Margherita Della Valle, director of Vodafone, said: “Today’s approval releases the handbrake on the UK’s telecommunications industry and the increased investment will position the UK as a leader in telecommunications Europe”.
Canning Fok, vice president of CK Hutchison, said the network investment plan will ensure “customers across the country benefit from world-leading network quality”.
The CMA has previously raised concerns that “higher bills or reduced services will negatively impact those customers least able to afford mobile services”. It also provisionally said the deal would negatively impact wholesale customers – mobile virtual network operators such as Sky Mobile and Lebara – who do not have their own networks.
Karen Egan, head of telecommunications at Enders Analysis, said the CMA’s decision was “a sensible way to give companies what they need to survive while ensuring that consumers are price protection and receive the improvement in network quality that the merger promises. .
The merger is expected to be officially completed in the first half of 2025.
