Home Money Watchdog approves £15bn deal between Vodafone and Three UK despite fears of higher bills

Watchdog approves £15bn deal between Vodafone and Three UK despite fears of higher bills

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Approved: The Competition and Markets Authority has approved the proposed £15bn merger between Vodafone and Three UK
  • The deal, first announced last year, will create the UK’s largest mobile operator.
  • Vodafone and Three UK have committed to investing £11bn in creating a new 5G network

Britain’s competition regulator has approved the £15bn merger of Three UK and Vodafone, paving the way for the creation of the country’s largest mobile operator.

The Competition and Markets Authority said on Thursday that the deal can go ahead if the two companies agree to spend billions on rolling out a combined 5G network across the UK.

Vodafone and Three UK, whose parent company is Hong Kong-based CK Hutchison, have committed to investing £11 billion in creating such a network over the next decade.

The couple have already promised to cap their lowest-cost mobile plans at £10 for two years after the CMA raised concerns that the tie-up would lead to higher bills for millions of mobile users.

The merger, first announced in June 2023, will create the UK’s largest mobile operator, with around 27 million customers, and reduce the number of operators from four to three.

Vodafone will take a 51 per cent stake in the expanded business, but will have the option to buy CK Hutchison Group’s 49 per cent stake three years after the deal closes, subject to certain conditions.

Approved: The Competition and Markets Authority has approved the proposed £15bn merger between Vodafone and Three UK

The two companies believe their consolidation will provide customers with a better 5G service, up to £5 billion in annual economic benefits for the country by 2030, and advance the UK’s digital transformation.

Stuart McIntosh, chair of the watchdog’s investigation into the merger, said: “It is crucial that this merger does not harm competition, which is why we have spent time considering how it could affect the telecommunications market.”

“We believe the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed, but only if Vodafone and Three agree to implement the proposed measures.”

Upon completion of the agreement, scheduled for the first half of 2025, the two groups must limit mobile rates and selected data plans and offer pre-established prices and contractual conditions for wholesale services for three years.

The alliance comes amid other transformative efforts under Vodafone CEO Margherita Della Valle, who is seeking to reduce the company’s massive debt and streamline operations.

Since taking office, Vodafone has sold its businesses in Spain and Italy in multi-billion pound deals, as well as its stake in telecoms infrastructure company Indus Towers, and has revealed plans to cut more than 11,000 jobs. in three years.

In its latest half-year results, the company reported that its services revenue rose 1.7 percent to 15.1 billion euros in the six months ending in September.

Combined with lower energy costs across Europe, this helped its adjusted pre-disaster profits rise 3.8 percent to €5.4 billion.

Vodafone’s Della Valle said the CMA’s decision “creates new strength in the UK telecoms market and unlocks the investment needed to build the network infrastructure the country deserves”.

He added: “Consumers and businesses will enjoy wider coverage, faster speeds and better quality connections across the UK as we build the biggest, best network in our local market.”

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: ‘A streamlined three-player market, as seen in countries such as the Netherlands and Switzerland, could lift profitability and encourage much-needed investment in the UK’s lagging networks. .

“This is a small victory for the sector, but it does not change the tough dynamics of the market.”

vodafone shares They rose 0.7 per cent to 70.3p on Thursday morning, although they have barely risen since the start of the year.

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