British trade regulators have bestowed their blessing on a proposed merger between two of the country’s biggest wireless phone and data providers, though with some strings attached.
This week, the Competition and Markets Authority (CMA) approved the £16.5 billion (around U.S. $21 billion) combination of Vodafone and Three, as long as both companies commit to investing billions into the development and deployment of a combined 5G wireless network.
The companies must also agree to offset “preset contractual terms” for mobile virtual network operators (MVNOs) that lease time on Vodafone and Three’s systems to provide phone service to customers. Often, MVNOs purchase wholesale access to Vodafone or Three’s networks, and then resell that access to customers through prepaid arrangements and at lower price points.
If all goes well, the combined Vodafone-Three will serve more than 29 million customers across the United Kingdom.
“The outcome – after months of intense regulatory scrutiny – is about as good as it could have got for Vodafone and Three,” Kester Mann, the Director of Consumer and Connectivity at CCS Insights, said in a research note on Thursday.
“Not only did they secure approval, but the agreed remedies and commitments are less onerous than feared,” Mann affirmed.
That was not without some regulatory hurdles first, which included an antitrust review launched by the CMA earlier this year and an in-depth probe into the merger that followed in the spring. Regulators were concerned that reducing the number of wireless operators from four to three might lead to less competition, which would open the door for wireless companies to raise prices.
