Vodafone UK and Three UK response to CMA Phase 1 decision
Vodafone UK and Three UK note today’s announcement that the CMA intends to refer their planned merger to an in-depth Phase 2 review.
This was an expected next step in the process and in line with the timeframe for completion that we set out from the outset.
Vodafone UK and Three UK remain confident that the transaction will deliver significant benefits for competition, customers and the country.
The current market structure has resulted in the quality of mobile network services in the UK lagging significantly behind other European countries (see footnotes). 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 enhanced digital connectivity offers (see footnotes).
The merger will create a third Mobile Network Operator 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, offering greater choice to Mobile Virtual Network Operators (MVNOs), which is the fastest growing segment of the UK’s mobile industry over the last few years.
We will review the potential concerns raised by the CMA and look forward to engaging constructively with them in this next phase as we set out the benefits of the merger for competition and for UK consumers and businesses.
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.
Vodafone UK CEO Ahmed Essam said:
“Having reached this important milestone, we look forward to working with the independent panel on the Phase 2 process. By merging our two companies, we will be able to invest £11 billion to help the UK realise its ambitions to be a world leader in next-generation 5G technology, and increase competition across the industry.
“This transaction will create an operator with the scale required to take on BTEE and VMO2, give MVNOs greater choice in the wholesale market and is in the wider interests of customers, competition and the country.”
Three UK CEO Robert Finnegan said:
“The current market structure is holding the UK back, which is not good for customers or competition. By creating a third player with the necessary scale to invest, the combination of our two companies will deliver one of Europe’s most advanced networks and move the UK into the digital fast lane, benefiting customers from Day One.”
Footnotes
· According to research published by OpenSignal in February 2024, the UK ranks 22nd out of 25 European countries for 5G availability and download speeds and has the slowest data download speeds in the G7.
· The EU 5G Observatory found in Spring 2023 that the UK ranks 17th out of 28 for 5G population coverage when compared to the 27 EU nations.
· Similarly, an Open Signal report in Summer 2023 found that the UK ranks 39th out of 56 countries when it comes to 5G availability, with the average mobile phone user being connected to a 5G network just 10.1% of the time. The same report ranks the UK 49th out of the 56 countries in terms of average download speeds, falling behind Germany, France, and the USA.
· According to Vodafone UK research, UK SMEs could be missing out on up to £8.6 billion per year in productivity savings due to the slow rollout of 5G Standalone (5G SA).