(Dec 5): Vodafone Group Plc’s £15 billion (US$19.1 billion or RM84.5 billion) merger with Three won the UK’s antitrust watchdog’s approval, paving the way to create Britain’s largest telecommunications operator by revenue.
Concerns over the combination’s impact on competition were addressed with commitments to invest in a large-scale upgrade of the UK’s mobile network and protect consumers against price rises, the Competition and Markets Authority said on Thursday.
“The Competition and Markets Authority has decided Vodafone’s merger with Three should be allowed to proceed if both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK,” the CMA said in a statement.
The deal, which will combine two of the country’s top four mobile operators, gives Vodafone 51% while CK Hutchison will control the remainder.
It’s a landmark decision for the European telecommunications sector, which has been lobbying for more consolidation for many years. For Vodafone, the approval is a win for chief executive officer Margherita Della Valle’s strategy to commit resources to key markets while divesting from others to overhaul a telecommunications empire that at one point stretched from the US to Africa.
The deal with the UK unit of the billionaire Li family’s CK Hutchison Holdings Ltd will boost competition in the sector and could improve the quality of the mobile networks, the CMA said.
Vodafone and Three have committed to invest £11 billion in the UK’s digital infrastructure to win approval for the deal.
The regulator said that the merger is subject to legally binding commitments to upgrade the network, cap mobile tariffs and data plans for three years and offer pre-set prices and contract terms for wholesale services for Mobile Virtual Network Providers. Telecommunications regulator Ofcom and the CMA will both monitor compliance with these commitments, the CMA said.
“Across Europe, people are realising the implications of under-investment in networks,” Della Valle told reporters on Thursday. “The decision that is being taken today in the UK has the potential to be a strong precedent.”
Vodafone shares rose 1.2% to 70.62 pence at 9:55am in London. They have gained 3% this year.
The deal is expected to complete in the first half of 2025, and Vodafone may acquire CK Hutchison’s 49% stake three years later, Vodafone said in the statement.
The decision falls in line with the watchdog’s provisional view, ending months of tense review. The move is a boon for Prime Minister Keir Starmer’s government, which aims to rip up red tape and attract investment to boost the UK’s sluggish growth.
The outcome is likely to spur further consolidation in Europe, where operators have been “clamoring for greater leniency” on mergers for years, Kester Mann, an analyst at CCS Insight, said. “It may give operators in other markets fresh confidence to strike new deals of their own,” he said.
The deal will increase pressure on other mobile operators in the UK, according to Karen Egan, senior telecoms analyst at Enders.
BT Group Plc’s mobile network EE will face the “greatest challenges in adapting to the new market structure,” with everyone under pressure to invest more in their networks, she added.
Uploaded by Magessan Varatharaja