CMA Probing Vodafone-Three Merger

“This
deal
would
bring
together
two
of
the
major
players
in
the
UK
telecommunications
market,
which
is
critical
to
millions
of
everyday
customers,
businesses
and
the
wider
economy,”
CMA
chief
executive
Sarah
Cardell
said.

Vodafone
shares
were
up
1.3%
at
68.98p
each
in
London
on
Friday
afternoon.

“The
CMA
will
assess
how
this
tie-up
between
rival
networks
could
impact
competition
before
deciding
next
steps.”

The
CMA
now
has
up
to
40
working
days
to
assess
the
deal,
and
decide
whether
a
more
in-depth
phase
two
investigation
is
required.

Three
UK
is
owned
by
CK
Hutchison
Group
Telecom
Holdings,
a
Hong
Kong-based
telecommunications,
ports,
infrastructure
and
retailing
conglomerate.
Vodafone
is
based
in
Newbury,
Berkshire,
and
operates
across
17
countries.

CK
Hutchinson
and
Vodafone
unveiled
plans
to
combine
their
UK
businesses
last
June,
with
Vodafone
to
own
51%
and
CK
Hutchison
49%
of
the
combined
operation.

This
prompted
the
CMA
to
invite
comments
on
the
proposed
deal
in
October,
as
it
considered
whether
the
tie-up
could
result
in
a
substantial
lessening
of
competition
in
UK
markets
for
goods
and
services.

Under
the
terms
of
the
proposed
deal,
neither
company
will
pay
cash
for
the
merger.
Instead,
they
will
take
on
debt.
Vodafone
will
take
on
£4.3
billion
and
Three
UK
£1.7
billion.

Back
in
June,
Vodafone
said
the
merger
in
the
UK
would
create
the
best
5G
network
in
Europe
and
around
£5
billion
per
year
in
economic
benefit
by
2030,
with
every
UK
school
and
hospital
having
access
to
standalone
5G
by
then.

Further,
Vodafone
had
anticipated
more
than
£700
million
of
annual
cost
and
capital
expenditure
synergies
by
the
fifth
full
year
post-completion.
It
had
expected
the
deal
to
close
before
the
end
of
2024.

The
news
of
the
investigation
comes
at
a
sensitive
time
for
Vodafone.
On
Wednesday,
deputy
prime
minister
Oliver
Dowden
declared
there
were
“national
security
risks”
from
a
UAE
firm
being
the
major
shareholder
in
the
telecommunications
firm.

Emirates
Telecommunications
Group
Co’s
strategic
relationship
with
Vodafone
could
allow
it
“materially
influence”
the
policy
of
Vodafone,
he
said.

He
explained
this
would
pose
a
threat
to
national
security
due
to
Vodafone’s
role
in
supporting
the
UK
government’s
domestic
and
international
telecommunications
initiatives,
contributing
towards
ensuring
UK
cyber
security,
and
acting
as
a
strategic
supplier
to
many
parts
of
the
UK’s
central
government.

By
Elizabeth
Winter,
Alliance
News
deputy
news
editor

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