A major update has been issued on the merger between Vodafone and Three in the UK.
This morning, the Competition and Markets Authority (CMA) said the deal could go ahead if the two companies agree to invest £11billion to upgrade the merged group’s network across the country.
The £ 15billion merger of the two telecom providers was first announced last year. If given the green light, it would bring 27 million customers together under a single provider. However, the watchdog warned that tens of millions of mobile phone users could end up paying more if it went ahead.
The CMA has now laid out a list of "remedies" required for the deal to go ahead. These include the networks committing to freezing certain tariffs and data plans for at least three years to protect customers from short-term price rises in the early years of the network plan. This will also include the group's sub-brands.
Alongside this, the group needed to commit to its previously announced plans to upgrade the UK's mobile network infrastructure over the next eight years. This would move to being a pledge by the providers to a legal obligation overseen by regulators. According to the CMA, the pledges - which outlined £11billion of investment - would boost competition between network providers in the UK.
Stuart McIntosh, chairman of the CMA's inquiry group, said: "We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed. Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger."
Vodafone and Three said they believe the CMA's provisional findings provide "a path to final clearance" of their merger plans. A spokesperson for the firms said: "The merger will be a catalyst for positive change. It will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country. The merger is also closely aligned with the Government's mission to drive growth and to encourage more private investment in the UK."
Russ Mould, investment director at AJ Bell, said the potential green light would be a "game-changer" for Vodafone. He said: "Vodafone had banked on the merger being its ticket to regaining strength in the UK, boosting its customer numbers and triggering investment in a better mobile experience for users.
"Assuming it agrees to the competition authority's demands, Vodafone could be at the forefront of a radical reshaping of the UK mobile network infrastructure. However, significant spending will inevitably lead to higher prices for consumers down the line, so the merger isn't necessarily good for everyone."