In a potentially game-changing move for the UK telecom industry, Vodafone and Three’s £15bn merger could soon receive regulatory approval. The UK’s Competition and Markets Authority (CMA) after five long months of review, has finally hinted that it may approve the Merger if the telecom giants commit to an £11bn investment in upgrading the merged network, the merger is likely to proceed. The CMA’s decision becomes a reality, then this will lead to the creation of the UK’s largest mobile network operator which will have an enormous subscriber base of more than 27 million which potentially can change the UK’s telecom landscape.
However, CMA has outlined specific conditions to address some concerns. Among them is a legally binding commitment to a robust £11bn upgrade of the network infrastructure, a critical element of the merged entity’s expansion plans. Moreover, Vodafone and Three are required to implement customer protections against price increases by freezing certain mobile tariffs and data plans for three years. This guarantee would extend across their sub-brands, ensuring that customers benefit from stable pricing in the short term.
Benefit to MVNOs
The merger once done, would be the biggest competition to the two other major players in the market, BT/EE and Virgin Media O2, which may be seen as a healthy competition. The merged company is also expected to benefit mobile virtual network operators (MVNOs) such as Sky Mobile, Lyca, and iD Mobile, which depend on larger networks to offer their own services. The CMA has stated that Vodafone and Three must guarantee pre-agreed prices and contract terms for MVNOs, ensuring they can secure competitive wholesale deals.
Stuart McIntosh, chair of the CMA’s inquiry group, stated that the merger will strategically strengthen competition in the UK mobile sector, provided that the proposed conditions are agreed upon. “A legally binding network commitment would boost competition in the longer term, and the additional measures would protect consumers and wholesale customers during the transition,” he added.
Once in a generation opportunity
In response, Vodafone and Three have expressed optimism about the CMA’s proposal, stating it offers “a path to final clearance” for the merger. The telecom firms have also highlighted the anticipated benefits of the merger, promising to deliver 5G connectivity to every school and hospital in the UK. According to both this merger is a once-in-a-generation opportunity that will boost UK’s digital infrastructure, which currently is behind many European counterparts.
Vodafone and Three have time till November 12 to respond, with a final decision expected on December 7. Only then, CMA’s approval will be finalized, the regulator’s provisional backing suggests a favorable outcome.
Impact on Indian stock market
Meanwhile, the merger may have some effects on the Indian stock market, where Vodafone Idea Ltd. operates as a joint venture with Aditya Birla Group. Positive news about Vodafone’s UK operations may boost investor confidence in Vodafone Idea, possibly leading to a short-term surge in its share price amid heightened interest in the global telecom landscape.