Vodafone: ‘Merger with Three would benefit every school, community and hospital in the country’

One of Newbury’s biggest employers says its plans for a merger would benefit every school, community and hospital in the country.

Vodafone wants to join its operations with Reading-based Three to create a new network which it says will lead to £11bn investment in 5G telephony.

But the Competition and Markets Authority (CMA) is warning that while the deal could improve the quality of mobile networks, it could see customers having to pay more or receive a lower quality service.

And it wouldn’t just be Vodafone and Three customers; the two networks allow other operators to piggyback on to its network, a process known as Mobile Virtual Network Operators.

Firms such as Lyca Mobile, Sky Mobile and Lebara would be affected by the number of network operators reduced from four to three – VodafoneThree, BTEE and VMo2.

Stuart McIntosh, CMA’s chairman of the inquiry group leading the investigation, said: "We will consider how Vodafone and Three might address our concerns about the likely impact of the merger on retail and wholesale customers while securing the potential longer-term benefits of the merger, including by guaranteeing future network investments.”

It will report possible remedies by Friday, September 27, provisional findings by Friday, October 4, and its final report by Saturday, December 7.

Vodafone, which has its HQ in The Connection, and Three said they disagree with elements in the CMA’s report, and said they would continue to work with it ahead of the final verdict.

On pricing, the firms say all social tariffs will remain in place and the merger wouldn’t affect other pricing strategies.

Instead, they would stay broadly the same or reduce.

The firms say this would be “a result of the vastly enhanced competitive pressures between Mobile Network Operators and Mobile Virtual Network Operators”.

The merged networks, they continued, would boost the wholesale market and give Mobile Virtual Network Operators more choice and better quality as currently 90 per cent of the market relies on O2 or EE for a share of the spectrum.

Margherita Della Valle, chief executive of Vodafone, said: “Our merger is a catalyst for change.

“It’s time to take off the handbrake on the country’s connectivity and build the world-class infrastructure the country deserves.

“We are offering a self-funded plan to propel economic growth and address the UK’s digital divide.”

This view was echoed by Three, which said it was committed to delivering the investment plan to build a ‘best-in-class’ network.

This, the firms added, could be monitored independently and enforced by Ofcom.

Robert Finnegan, chief executive of Three, said: “The current UK four-player mobile market is dysfunctional and lacks quality competition with two strong players and two weak players.

“This is reflected in the current state of the UK’s digital infrastructure that everyone agrees falls well short of what the country needs and deserves.

“We are determined to reassure the CMA in relation to their provisional concerns and work with them to secure the extensive benefits this merger brings for UK customers, businesses and wider society.”