Just a few weeks after the UK one Competition and Markets Authority (CMA) warned that the proposed merger of mobile network operators Vodafone and Three would likely lead to higher prices and reduced services, has now offered telcos a path that could address competition concerns through network investment and customer protection .

More precisely, a Work document remedies provisionally found that a multibillion-pound commitment to upgrade the merged company’s UK network, including the rollout of 5G, combined with short-term customer protection, could resolve competition concerns identified in September 2024 and allow the merger to proceed . .

Vodafone and Three have announced plans to merge for the first time in June 2023, a move that was seen as a response to BT’s acquisition of EE in 2016 and the 2021 merger of Virgin Media and O2 to form VMO2.

The merged company would have 27 million mobile phone subscribers in the UK. Trei UK and Vodafone justified the combination by saying it would boost the roll-out of 5G infrastructure and allow greater scale to compete with the larger, converged telecoms and mobile players in BT/EE and VMO2.

CMA has started an inquiry into the merger in October 2023, and in its latest progress update it said “tens of millions” of mobile customers could see the cost of their mobile phone plans increase or services such as data allowances cut.

While acknowledging that the merger could improve the quality of mobile networks and advance the deployment of next-generation 5G networks and services, the CMA added that it believed these claims were “exaggerated” and that the resulting entity “would not necessarily” have an incentive to fulfill its proposed investment program”.

The CMA also found that the wholesale market where virtual operators – such as Sky Mobile, Tesco Mobile, Lebara, Lyca Mobile and iD Mobile – buy back airtime from the four network operators could see worse deals by reducing competition from at four to three. suppliers.

At the same time, the CMA also consulted on ways to address its concerns – known as remedies. The Work document remedies sought views on the effectiveness of a proposed remedy package and provisionally found that a legally binding commitment to undertake the network integration and investment program proposed by Vodafone and Three would significantly improve the quality of the merged company’s mobile network , stimulating competition between mobile networks. long-term operators and benefiting millions of people who rely on mobile services.

That said, the CMA also found that short-term protections would be needed to ensure that retail consumers and mobile virtual network operators can continue to secure good deals during the early years of network integration and rollout. investments.

The remedies proposed today would require Vodafone and Three to take three main actions. First, they should deliver their joint network plan, which sets out the network modernization and improvements they will make through significant levels of investment over the next eight years across the UK. This would be a legal obligation overseen by both UK telecoms regulators Ofcom and CMA.

Second, they would have to commit to keeping certain existing mobile tariffs and data plans for at least three years, an act the CMA said would protect millions of current and future Vodafone/Three customers (including customers of their subs) the term price increases in the first years of the network plan. Finally, they should commit to pre-agreed prices and contractual terms to ensure that mobile virtual network operators can obtain competitive wholesale offers.

“We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed,” said Stuart McIntosh, chairman of the CMA inquiry group which is leading the investigation.

“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale suppliers would address our concerns while preserving the benefits of this merger. A legally binding network commitment would boost competition in the long term, and additional measures would protect consumers and wholesale customers while network upgrades are underway.”

The CMA stressed that its announcement was provisional, with a final decision to be made before its December 7 statutory deadline.