Vodafone boss says European regulators need to ‘reboot’ and be more supportive of growth in the sector

The chief executive of Vodafone Group has stated that European regulators need a “reboot” as she advances with her UK merger deal. 

“We are at a new junction,” Margherita Della Valle said, “and to be on the right road, European policymakers need to change direction now.”

“They need to reboot our legacy telecoms regulation and create a real single market supporting 5G standalone rollout at pace,” added Della Valle, who has led Vodafone since April last year.

She made these remarks to an audience consisting of global telecoms industry players gathered at the Mobile World Conference in Barcelona on Monday.

Della Valle is currently pushing ahead with a proposed tie-up between Vodafone’s UK business and Three UK, announced last summer.

In January, the UK’s competition watchdog launched a formal Phase 1 investigation into the merger of Vodafone and Three, which is owned by the Chinese firm CK Hutchinson.

The Competition and Markets Authority (CMA) has urged third parties, including other network operators, to provide their perspectives on how the proposed merger might impact competition.

It is due to publish the findings of the initial probe by 22 March 2024, which could trigger another investigation.

The CMA has the power to block mergers or demand concessions from companies to address competition or national security concerns.

Vodafone and Three UK argue that their merger is necessary to successfully roll out 5G, which Della Valle said is a “multi-trillion opportunity” for Europe to increase industrial efficiency, boost innovation, and improve public services.

“Europe needs investment, and investors need to see changes such as a competition policy that allows each market to reach the economies of scale 5G requires and a real single market, with one set of European rules instead of 27 sets of national rules,” she explained.

However, some have argued that the merger deal, which would reduce the UK telecoms market from four players to three, could harm competition, raise prices for consumers, and raise national security concerns.

There may already be a shift underway. Last week, the European Commission approved, under the EU Merger Regulation, the proposed creation of a joint venture by Orange and the Spanish telco MásMóvil.

Kester Mann, a telecoms analyst at CCS Insight, said both parties will hope that this news represents a shift in position from the region’s regulators.

“But they should be cautious,” he warned, “this deal will be reviewed by the UK’s Competition and Markets Authority (CMA), whose stubbornness last year in initially blocking the tie-up between Microsoft and Activision Blizzard shows it won’t be won over easily.”

Orange and MásMóvil also had to offer a package of remedies to get their deal over the line, which included offering spectrum and national roaming access to a rival provider, Digi.

“If Vodafone and Three are required to do similar, they would be reliant on finding a willing third party to complete the deal. That may not be easy,” Mann explained.