Vodafone & Three defend merger, promising £11 billion investment & competitive pricing

The response from UK telecommunications companies Vodafone and Three to the UK Competitions and Markets Authority’s (CMA) Notice of Possible Remedies (Remedies Notice) has been released.

Both companies disagree with the CMA’s Provisional Findings, arguing that the merger will be pro-growth, pro-customer, pro-investment, and pro-competitive for the UK. “It is a once-in-a-generation opportunity to transform UK digital infrastructure with £11 billion [€11bn] of network investment,” they assert.

“We continue to constructively engage with the CMA and remain confident that we can work with them to secure approval,” they state. “Our response to the Remedies Notice contains several additional commitments, which we believe comprehensively address the issues they have raised.”

Vodafone and Three have already made two significant commitments:

1. The £11 billion network investment commitment will ensure UK customers enjoy one of Europe’s most advanced networks, leveling the playing field with the two larger players to drive competitiveness. They are agreeable to Ofcom monitoring and enforcing this commitment.

2. The merger will extend network quality benefits beyond the merged company’s customer base, reaching VMO2’s direct and MVNO customers. This agreement will provide better quality, enhanced capacity, and greater coverage to over 50 million mobile customers nationwide. Upon approval of the merger, Vodafone and Three have also agreed to sell spectrum to VMO2 to better align spectrum holdings in the UK market.

“While we do not agree with the CMA’s provisional findings that prices will increase, we continue to explore how we can answer its concerns,” they confirm. To address both retail and wholesale segments of the market, their additional commitments include:

- For retail customers: they will maintain tariffs at £10 or below for two years from the completion of the merger for value-focused customers on the SMARTY brand, implement social tariffs on both the SMARTY and VOXI For Now brands, and continue measures to protect registered vulnerable customers.

- For wholesale customers: they will provide a reference offer that encourages MVNOs—the fastest-growing part of the market—to access their additional network capacity, enabling them to offer great deals to retail customers.

“The merger of Vodafone and Three is a catalyst for change,” they declare. “It will deliver a step-change in connectivity to UK customers and bring best-in-class 5G to every school and hospital in the country. Transforming the UK’s digital infrastructure is also vitally important for businesses, the public sector, the UK’s technological advancement, and the government’s stated mission to kickstart economic growth.”

“We will set out comprehensively why the merger is pro-growth, pro-customer, pro-investment, and pro-competitive in our forthcoming response to the CMA’s Provisional Findings,” they state.

The CMA’s final decision on the merger is anticipated by December 7th, with Vodafone and Three confirming their intention to continue engaging positively with the Authority to resolve outstanding issues.

Paolo Pescatore, TMT Analyst at PP Foresight, described the telcos’ response as “unsurprising,” noting their continued disagreement with the remedies. However, he found it encouraging that they have shown a clear willingness to work collaboratively on several areas, such as their commitment to long-term investment, price freezes on selected tariffs under £10 for two years, and efforts to enhance competition in wholesale.

“It remains to be seen if the entity has done enough on pricing to ease the CMA’s concerns,” he suggests. “This could be a sticking point that makes or breaks it. A path to approval exists, which is key for all parties.”

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