Vodafone/Three merger likely to increase mobile prices, warns competition watchdog

The UK competition watchdog has raised concerns about the proposed merger of mobile network operators Vodafone and Three, stating that it could result in higher prices and reduced services for consumers. However, the Competition and Markets Authority (CMA) has asked the companies to propose ways to address these potential negative outcomes.

The CMA initiated an investigation into the merger in October of last year and has now highlighted that millions of mobile customers may face increased costs or decreased services such as data allowances. Additionally, the CMA found that the wholesale market, where virtual operators resell airtime from the four network operators, could see a decrease in competition if the merger goes through.

The CMA has preliminarily concluded that the merger would diminish competition in both retail and wholesale mobile markets in the UK. Vodafone and Three announced their merger plans in June 2023, aiming to create a strong third operator in response to industry changes.

Despite potential benefits like improved network quality and accelerated 5G deployment, the CMA remains skeptical about the merger’s impact on competition. Telecoms analyst Matthew Howett believes that remedies could address concerns over consumer prices and ensure network investment commitments are met.

The CMA will continue to review the merger and may require Vodafone and Three to make legally binding commitments to address competition concerns. The merged company would have 27 million mobile subscribers in the UK and aims to enhance 5G infrastructure and compete with larger players in the market.