The two make further commitments but pricing appears to be the sticking point
Vodafone and Three UK are not happy about Notice of Possible Remedies published in mid-September by the UK’s Competition and Markets Authority (CMA) concerning their proposed merger.
The would-be mergees have officially responded, disagreeing with the body’s Provisional Findings. In short, they are arguing that the merger would be good for growth, customers, investment and competitive in the UK. They argue, “It is a once-in-a-generation opportunity to transform UK digital infrastructure with £11 billion of network investment”.
They will continue to engage with the CMA and “remain confident that we can work with them to secure approval. Our response to the Remedies Notice contains several additional commitments, which we believe comprehensively address the issues they have raised”.
Vodafone and Three have already made commitments. The first is that their £11 billion investment in the network will “ensure UK customers enjoy one of Europe’s most advanced networks and it will level the playing field with the two larger players to drive competitiveness. We are happy for Ofcom to monitor and enforce this commitment”.
Secondly, they say the merger will extend the benefits of the network’s quality beyond their own merged customer base, by extending it to VMO2’s direct and MVNO customers.
Thirdly, on approval of the merger, Vodafone and Three have also agreed to sell spectrum to VMO2, helping to create a better alignment of spectrum holdings in the UK market.
Maintaining tenner tariffs
As part of their ongoing engagement with the CMA, the parties have said that they will maintain tariffs at £10 or below for two years from the completion of the merger on the SMARTY brand, social tariffs on both the SMARTY and VOXI For Now brands, and continue measures to protect vulnerable customers who are registered.
Also they pledge to provide a reference offer “that encourages MVNOs” to access the additional network capacity. MVNO is the fastest growing sector of the market.
Paolo Pescatore, Founder of PP Foresight, comments that Vodafone and Three UK have taken an “Unsurprising defiant position as they still disagree largely with the remedies, but encouragingly [have a] clear willingness to work closely on a number of areas such as commitment to investment over the long period, price freeze on selected tariffs under £10 for two years and collaborating on increasing competition in wholesale.
“It remains to be seen if the entity has done enough on pricing to ease the CMA’s concerns. This could be a sticking point that makes or break it. A path to approval exists which is key for all parties.”
The CMA’s final decision on the merger is not due until 7 December, and Vodafone and Three insist they “will continue to positively engage with them to resolve outstanding matters”.