UK competition to further investigate merger between Vodafone and Three

MADRID, 4 Abr.

UK competition to further investigate merger between Vodafone and Three


The UK Competition and Markets Authority (CMA) has decided to refer for an "in-depth investigation" the joint venture that would result from the agreement between Vodafone Group and CK Hutchison Holdings Limited, considering that this merger may result in a substantial decrease in competition in the UK.

The CMA had announced on March 22 its intention to open an in-depth investigation over concerns that the merger between Vodafone UK and Three UK would lead to higher prices and reduced quality unless the companies presented "significant" solutions. in the following days.

The British regulator has indicated that on March 28 "the parties informed the CMA that they would not offer such commitments", which has led the Authority to refer the case for an in-depth investigation, which will take place until next March 18. September.

In this regard, the CMA has indicated that, on the basis of the information currently available to it, "this merger is or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom".

The CMA launched its initial "Phase 1" investigation at the end of last January to assess whether the deal could lead to a "substantial lessening of competition" and therefore required an in-depth "Phase 2" investigation. ", which allow an independent panel of experts to further investigate the initial concerns identified.

The British regulator expressed concern at the end of March that the merger between 2 of the country's 4 mobile network operators "could lead to higher prices for customers and affect investment in UK mobile networks," adding that the combination can lead to mobile customers facing "higher prices and reduced quality."

The CMA is also concerned that the deal could make it harder for smaller "virtual" mobile network operators, such as Sky Mobile, Lebara and Lyca Mobile, to negotiate good deals for their own customers, by reducing the number of network operators mobile phones capable of hosting these 'virtual networks'.

Last December, the European Commission gave its approval to the agreement between Vodafone and CK Hutchison Group Telecom (CKHGT) to merge their telecommunications business units in the United Kingdom, which in the case of CKHGT are carried out through Three UK , concluding that the operation would not have a negative impact on the European economic area, since its effect would be "limited."

As reported by the companies when announcing the agreement, Vodafone will own 51% of the merged business and CKHGT the remaining 49%, adding that around 11 billion pounds (around 12.4 billion euros) will be invested in the next decade to create one of the "most advanced independent 5G networks" and in "full compatibility" with the objectives of the country's Government.

The transaction, which is expected to be completed by the end of 2024 depending on regulatory approvals, has been carried out without a cash payment, as both companies have contributed debt to complete the distribution of 51% for Vodafone and 49% for CKHGT .

Vodafone highlighted that the merged company will generate profits of around 5,000 million pounds (about 5,840 million euros) by 2030, to which is added the creation of jobs and support for the digital transformation of the United Kingdom.

In addition, the operation is expected to generate synergies of around 700 million pounds (about 817 million euros) in costs and capital investments from the fifth year after the closing of the operation.

In relation to the direction of the new company, the current CEO of Vodafone in the United Kingdom, Ahmed Essam, will become the chief executive of the new company, while the current financial director of Three UK, Darren Purkis, will assume the same role. position in the new combined business.