Proactive Investors - The UK competition watchdog has raised concerns that the planned merger between Vodafone Group PLC (LON:VOD) and Three “could lead to mobile customers facing higher prices and reduced quality”.
Following a Phase 1 investigation launched in January into the merger, the Competition and Markets Authority found that both telecoms providers “provide important alternatives for mobile customers”.
Last year, Vodafone agreed to merge its UK operations with Three UK, owned by Hong Kong's CK Hutchison, to create a £15bn entity, with Vodafone a 51% majority owner.
The watchdog today stated: “Both have made significant investments in their networks in recent years – which includes the rollout of 5G.
“Three UK is also generally the cheapest of the four mobile network operators. The CMA is concerned that combining these two businesses will reduce rivalry between mobile operators to win new customers.
“Competitive pressure can help to keep prices low, as well as provide an important incentive for network operators to improve their services, including by investing in network quality.”
Both Vodafone UK and Three UK have five working days to respond with meaningful solutions to the CMA, otherwise the deal will be referred to a more in-depth Phase 2 investigation.