26 January 2024 , 11:17
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The proposed merger of Vodafone and Three is set to undergo an official investigation by the UK's competition watchdog.
The Competition and Markets Authority (CMA) confirmed it has initiated a formal investigation into the planned £15 billion merger. It will consider whether the merger could lessen competition for mobile users by combining these two firms into a single service provider.
If consumer concerds were found during this primary study, the CMA could launch a more comprehensive investigation into the union. The largest mobile phone network in the UK would be created by this merger, which was announced last year.
As expected, regulators scrutinised this deal, reducing the number of significant mobile providers in the UK from four to three. Trade unions have also voiced their concern regarding the possibility of job losses due to the merger.
Sarah Cardell, chief executive of the CMA stated: "This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy. The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps."
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She added: "We now have 40 working days to complete this formal phase one investigation, before publishing our findings and any next steps." Vodafone UK's boss, Ahmed Essam, responded to the CMA's announcement, saying: "We have formally submitted our merger notice to the CMA, having worked with them closely through the pre-notification process.
"We look forward to continuing the constructive conversations now that the formal process has begun. We strongly believe that the proposed merger of Vodafone and Three will significantly enhance competition by creating a combined business with more resources to invest in infrastructure to better compete with the two larger converged players."
"Our commitment to invest £11 billion will build capacity to meet the exponential growth in demand for data and accelerate the rollout of advanced 5G across the UK, delivering benefits to consumers and businesses throughout the nation."
Three UK's chief, Robert Finnegan, said: "By combining networks, Three UK and Vodafone UK will unlock £11 billion of investment that will help the UK close the 5G gap with leading European countries and realise its ambitions to be a front-runner in digital connectivity. Thanks to this transaction, 95% of the population and every school and hospital will be covered by standalone 5G by the end of the decade."
"Joining forces will also yield more immediate benefits. From day one, our customers will enjoy faster, more reliable coverage over more of the country and without paying a penny extra. We are confident that this transaction will deliver significant benefits to our customers, the country and competition, and we look forward to working closely with the CMA as they review our notification."
The Deputy Prime Minister, Oliver Dowden, has raised national security concerns over a UAE firm becoming the major shareholder in Vodafone. In an order published on Wednesday, it was stated that the relationship between Emirates Telecommunications Group (Etisalat by e&) and Vodafone could "enable it materially to influence the policy of Vodafone".
Dowden ruled that e&'s stake in Vodafone could pose "a risk to national security" regarding cybersecurity and the operator's role as a key supplier to many parts of government. E& has built up a 14.6% stake in Vodafone, deepening a strategic tie-up that began in May 2022.
Vodafone announced in May that e& chief executive Hatem Dowidar would join their board as a non-executive director. Eight months after the initial move, Mr Dowden has now set conditions for Vodafone and e&.
These include "meeting certain requirements relating to Vodafone's board composition" and establishing a "establish a national security committee to oversee sensitive work that Vodafone and its group perform which has an impact on, or is in respect of the national security of the UK".
* An AI tool was used to add an extra layer to the editing process for this story. You can report any errors to [email protected]
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