UK regulator orders changes to £16.5bn Vodafone-Three merger

The UK competition watchdog has found that the proposed £16.5bn merger of Vodafone’s business with CK Hutchison’s Three UK could lead to higher bills for tens of millions of customers, and demanded that the companies make changes to the deal.

The companies must agree remedies for the tie-up to proceed, the Competition and Markets Authority said on Friday, as it announced the initial findings of an in-depth probe into the deal, which was first announced in 2023. The regulator said it would “explore potential solutions” to its concerns before a final decision by December 7.

Vodafone and Three initially agreed to merge their UK operations last year. That deal, which would create a mobile network encompassing some 27 million customers, has remained in stasis as it awaits regulators’ approval. Two serious objections have since emerged: one surrounding the ability of the new company to securely oversee sensitive public contracts, given the ownership of Three by Hong Kong-based holding company CK Hutchinson, and the general competition implications of such a large firm emerging within the UK’s relatively moribund 5G market.

But CMA warns that Tens of millions could pay more if the merger goes ahead. The new combined network would not “necessarily have the incentive” to follow through on its investment and improvement plan. Customers may have to pay more for services they don’t value, the regulator also said.

The CMA added it is particularly concerned about the possible effect on those least able to afford higher bills. It is also worried some people could end up with a reduced service, perhaps with smaller data packages in phone contracts, post-merger.