The proposed spectrum deal strengthens Three UK and Vodafone’s case for their proposed merger, under investigation by the competition authority
Virgin Media O2 (VMO2) and Vodafone UK have agreed to extend their long-established network sharing agreement into the mid 2030s. No further details were available. They will also enter into a spectrum deal that addresses some of the concerns regarding Vodafone’s proposed merger with Three UK, if the merger goes through. Again, details were not forthcoming.
Under the terms of the proposal VMO2 will acquire spectrum from the merged entity at market value. The deal is currently under scrutiny by the UK’s Competition and Markets Authority (CMA).
In a statement, the would-be mergees claim this spectrum deal with VMO2 would address “the current imbalances in spectrum holding” and allow both the merged entity and VMO2 to provide greater capacity, speed and coverage.
According to a joint statement from VMO2 and Vodafone UK, the spectrum deal after the merger would create “three scaled mobile network operators, each with better alignment of spectrum holding”.
The two also say that their merger would result in better “mobile connectivity, choice and competition”. The merged entity has committed to investing £11 billion in its infrastructure over the next 10 years, plus VMO2’s planned annual investment of £2 billion in its networks and services.
This will benefit consumers and business customers, they add, including MVNOs who will have “a choice of three high-quality, scaled wholesale competitors…supporting an already thriving MVNO segment in the UK”.
“The proposed merger, together with this agreement, will boost competition by establishing a strong third player in the UK mobile market and will improve the balance of spectrum holdings, levelling the playing field between the UK’s mobile operators,” said Ahmed Essam, Vodafone CEO for European Markets. According to VMO2’s CEO, Lutz Schüler, the agreement “addresses the issues we have voiced and the CMA outlined in its initial decision, and will now continue our engagement with the regulator in this spirit.”
EE, owned by incumbent BT, has the UK’s largest mobile network and has opposed the Vodafone and Three merger in its response the CMA’s consultation.