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Vodafone and Three UK merger faces UK antitrust investigation

By Nithya Bose in Business News, posted January 29, 2024

The British competition regulator is looking into the proposed merger between Vodafone and Three UK.

The initial probe will determine if the deal could highly diminish competition in the UK telecommunications market.

CMA CEO Sarah Cardell said: "This merger involves two major players in a market vital to millions of consumers, businesses, and the broader economy."

The agency will evaluate the potential competitive impacts of this consolidation before deciding on further action.

It has a 40-working-day period to review the deal and decide on the subsequent steps.

Under the terms of the agreement made last year, Vodafone would acquire a 51 percent stake in the joint entity, with CK Hutchison retaining a minority interest.

Ahmed Essam, the current CEO of Vodafone UK, is to lead the merged company.

Three UK's Chief Financial Officer, Darren Purkis, will take up the CFO role in the new organisation.

This merger comes at a time of transition for Vodafone following the departure of its former CEO, Nick Read, at the end of 2022.

In April, Margherita Della Valle was appointed as the permanent CEO to spearhead the company’s transformation.

The merger, if approved, would reduce the number of mobile network operators in the UK to three.

It reflects a trend of substantial consolidation in the telecommunications sector in recent years.

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Vodafone and Three UK have jointly defended the proposed merger.

Essam said: “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.”

He said the company looks “forward to continuing the constructive conversations” with the CMA as the formal process has started.

This investigation is part of the CMA's recent intensified scrutiny of major mergers and acquisitions.

The watchdog had initially delayed Microsoft's $69 billion acquisition of gaming firm Activision Blizzard before eventually approving the deal.

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