Vodafone’s blockbuster merger with Three to form the biggest mobile telecoms operator in the UK has been cleared by the competition regulator, 18 months after plans for the tie-up were first announced.
The approval of the deal paves the way for an £11bn infrastructure investment package to create one of Europe’s most advanced 5G networks, reaching 99% of the population and benefitting over 50 million customers.
The Competition and Markets Authority (CMA) said it “considers that if VUK and 3UK commit to their proposed network investment programme, the Merger is likely to boost competition in the long term in both markets and result in significant increases in mobile network quality in the UK.”
The CMA added that time limited protections would be needed for at least three years to protect retail customers during the initial years of the tie-up “before the competitive benefits of the roll-out are sufficiently evident.”
Under the conditions of the merger approal, Vodafone and Three would deliver their joint network plan, setting out the network upgrade, integration and improvements they will make to their combined network across the UK over the next eight years, while also selected mobile tariffs and data plans for three years – directly protecting affected customers from short-term price rises in the early years of the network plan.
The network improvement commitment would be overseen by both the CMA and media regulator Ofcom, with the merged company needing to publish an annual report setting out its progress.
Vodafone’s shares rose 0.8% to 70p following the deal’s announcement.
Vodafone CEO Margherita Della Valle said: “Today’s decision creates a new force in the UK’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves.
“Consumers and businesses will enjoy wider coverage, faster speeds and better-quality connections across the UK, as we build the biggest and best network in our home market. Today’s approval releases the handbrake on the UK’s telecoms industry, and the increased investment will power the UK to the forefront of European telecommunications.
She told UKTN: “We are now going through a year of transition as we deliver on the transformation. We have been growing this year and we have indicated that we expect our growth the accelerate into next year.”
Robert Finnegan, the CEO of Three UK, added: “It’s not going to be two or three years before people see the benefit — from day one at least seven million people will see improved network speeds.
“You’re not going to attract inward investment into parts of the UK where you have poor quality mobile infrastructure…we’re lagging way behind not just the US but the rest of Europe in terms of where we rank on a mobile quality infrastructure. From today that changes.”