Vodafone and Three hit back at regulator’s concerns in merger battle

Vodafone and Three have pushed back against the regulator’s concerns over their proposed £15bn merger, insisting that “outstanding issues can be resolved,” following the latest findings from the Competition and Markets Authority (CMA).

In a response published today, the telecom firms said they “remain confident” in the deal, which would combine two of the UK’s largest mobile operators.

Earlier this month, the CMA raised alarms over potential price hikes for millions of mobile customers and a potential reduction in service offerings, such as smaller data packages.

The watchdog also flagged “particular concerns” about the merger’s impact on vulnerable customers, warning that they could face higher bills or be forced to pay for network upgrades “they do not value.”

Vodafone and Three, however, have doubled down, offering two additional remedies to quell the watchdog’s concerns. 

Further commitments made today include a pledge to freeze tariffs at £10 or below for value-focused customers, and to maintain social tariffs on both the SMARTY and VOXI 4 Now brands.

They also proposed an offer to encourage mobile virtual network operators (MVNOs) such as Giffgaff to use their potentially increased network capacity.

The firms had already committed to a legally binding £11bn investment in digital infrastructure, with oversight by Ofcom, and renewed their network-sharing deal with Virgin Media O2. They say these pledges will guarantee healthy competition among the sector’s three biggest players: Vodafone-Three, BT/EE, and Virgin Media O2.

Vodafone also confirmed today that shareholder approval will no longer be required, thanks to changes in the UK Listing Rules (UKLRs) earlier this year. 

It means the deal’s future lies with the CMA, which must decide by 7 December.

Leading telecoms analyst Paolo Pescatore said it is unsurprising that Vodafone and Three are standing firm but encouraging that they are working closely on the new commitments.

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