Vodafone’s £15bn merger with Three has received approval from the UK antitrust body, paving the way to create Britain’s biggest telecoms operator by revenue.
Concerns about the impact of the combination on competition have been 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 (CMA) said. this Thursday (5).
“The Competition and Markets Authority has decided that Vodafone’s merger with Three should be allowed if both companies sign binding commitments to invest billions in rolling out a combined 5G network across the UK,” the CMA said in a statement. .
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The deal, which will combine two of the country’s four main mobile operators, will give Vodafone 51%, while CK Hutchison will control the remainder.
It’s a historic decision for the European telecommunications sector, which has been pushing for more consolidation for many years. For Vodafone, the approval is a victory for CEO Margherita Della Valle’s strategy of committing resources in key markets while divesting others to reshape 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 will increase competition in the sector and could improve the quality of mobile networks, the CMA said.
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Vodafone and Three have committed to investing £11 billion in the UK’s digital infrastructure to get the deal approved.
The regulator said the merger is subject to legally binding commitments to upgrade the network, cap mobile tariffs and data plans for three years, and offer pre-established pricing and contractual terms for wholesale services to Mobile Virtual Network Providers. Telecoms regulator Ofcom and the CMA will monitor compliance with these commitments, the CMA said.
“Across Europe, people are realizing the implications of underinvestment in networks,” Della Valle told reporters on Thursday. “The decision being made today in the UK has the potential to be a strong precedent.”
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Vodafone shares were up 1.2% at 70.62 pence at 9.55am in London. They gained 3% this year.
The deal is expected to close in the first half of 2025, and Vodafone could acquire CK Hutchison’s 49% stake three years later, Vodafone said in the statement.
The decision is in line with the regulator’s interim view, ending months of tense review. The move is a boon for Prime Minister Keir Starmer’s government, which aims to cut red tape and attract investment to boost the UK’s sluggish growth.
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The outcome will likely spur more consolidation in Europe, where traders have been “crying for greater leniency” on mergers for years, said Kester Mann, an analyst at CCS Insight. “It could give operators in other markets new confidence to close new deals,” he said.
The deal will increase pressure on other mobile operators in the UK, according to Karen Egan, senior telecommunications analyst at Enders.
BT Group’s EE mobile network will face the “biggest challenges in adapting to the new market structure”, with everyone under pressure to invest more in their networks, he added.
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