Three and Vodaphone merger could affect millions says UK watchdog

The UK’s Competition and Markets Authority (CMA) has expressed fears that the Three and Vodaphone merger deal could lead to millions seeing their mobile phone bill rise.

The CMA has set out a provisional view (September 13) of the merger deal, and the British regulator is worried there may be an unfair advantage as a result of these two massive companies coming together.

The organization says the agreed cellular deal “could lead to tens of millions of mobile customers having to pay more.”

The CMA investigated the deal with an independent inquiry group, concluding that it “would lead to price increases for tens of millions of mobile customers, or see customers get a reduced service, such as smaller data packages in their contracts.”

The watchdog worries that higher bills or reduced services would hurt those struggling to afford mobile packages. The CMA believes this also means less competition in the market, with a reduction in network operators from four currently to three post-merger.

Four companies dominate UK cellular market

Companies like Lyca Mobile, Sky Mobile, and Lebara operate Mobile Virtual Network Operators (MVNOs) via four existing networks in the UK. This deal would reduce their options for mobile services and hinder competition, as well as what deals they can offer subscribers.

According to a market review by Opensignal, a market research and analytics company, these four major players—EE, O2, Three, and Vodaphone— are increasingly fighting in a highly saturated and competitive market.

The Opensignal report (March 26) on the projections of this merger states that Vodafone and Three’s customer bases are “18.6 million and 9.4 million mobile connections in Q4 2023 respectively, which if combined together would bring their market share to 32% in the UK market.”

Margarita Della Valle, Vodafone’s Chief Executive, said, “Our merger is a catalyst for change. It’s time to remove 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.”

Vodaphone published a statement in response to the CMA findings: “Vodafone UK disagrees with elements in today’s (September 13) provisional findings. The companies will continue to engage positively with the CMA to resolve outstanding matters ahead of the final report on 7 December 2024.”

The mobile operator is confident that the merger will lead to £158 billion in productivity benefits for the UK. The company has set a target of having 5G in every community, school, and hospital by the end of 2030.

Image: Vodaphone.

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