Thursday, May 23, 2024

    UK government gives its clearance for Vodafone-Three UK merger to go ahead

    Tie up to make largest operator in UK with the most advanced 5G network in 10 years time takes a step closer, but competition authorities still to rule

    The UK government has made a final order to conditionally approve the proposed merger of Vodafone UK and Three UK, following security scrutiny. A separate investigation into the merger by the competition regulator, however, is still on-going.

    Commenting on the approval, a joint statement by Vodafone and Three UK said: “We are pleased our proposed joint venture has been approved by the Government under the National Security and Investment Act.

    “We are continuing to engage collaboratively with the Competition and Markets Authority to inform its ongoing review of our merger, which we strongly believe will strengthen competition in the UK’s mobile sector and enable a significant step-up in the UK’s mobile network infrastructure.”

    The move, should it be approved, would take the total number of mobile networks in the UK from four down to three. However, the current market structure has resulted in the quality of mobile network services in the UK lagging significantly behind other European countries. Vodafone UK and Three UK are sub-scale, unable to cover their cost of capital, and constrained in their ability to invest and compete effectively against the two market leaders. As a result, customers and businesses are missing out on the benefits offered by enhanced digital connectivity.

    The merger will create a third MNO in the UK with scale, able and incentivised to invest fully in a best-in-class network. Millions of customers across the UK will benefit from day one, thanks to a step-change in network quality, speed, and coverage. A combined network would also boost competition in the wholesale market, by offering greater choice to MVNOs, the fastest growing segment of the UK’s mobile industry.

    Both carriers say that, if the merger goes ahead, the new carrier – which will be 51% owned by Vodafone – will have more than 27 million subscribers, leapfrogging EE, owned by BT, and Virgin Media O2, owned by Spain’s Telefónica and the US-listed company Liberty Global.

    They have also pledged to invest £11bn in the UK over ten years to create one of Europe’s most advanced standalone 5G networks, in full support of UK Government targets. By having a best-in-class 5G network in place sooner, the merger will deliver up to £5 billion per year in economic benefit by 20304, create jobs and support digital transformation of the UK’s businesses. Every school and hospital in the UK will have access to standalone 5G by 2030.

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