The U.K.’s antitrust regulator has given its initial decision on combining two major telecom operators in the country. The Competition and Markets Authority (CMA) mentioned that if Three and Vodafone merge, it could lead to higher prices for consumers, less service quality, and reduced investments in U.K. mobile networks.
The CMA also expressed concern that the merger might make it harder for other operators like Lyca Mobile and Lebara to access fair deals, which would increase prices for their customers. Three and Vodafone announced their merger plans 15 months ago, but regulatory authorities needed to review it as it would reduce the number of major mobile network operators in the U.K. from four to three.
The CMA started its investigation in January and found that having more competitors keeps prices low. If the merger reduces the number of players, prices could go up. The CMA noted that separate companies are more likely to invest in network coverage and offer better services than one big entity.
The CMA believes that the merger might improve mobile networks’ quality but is unsure if the new entity will invest as promised. The regulator has suggested some solutions for the concerns, including selling parts of the businesses or assets to enhance competition.
In a joint statement, Three and Vodafone disagreed with the CMA’s concerns and are reviewing potential solutions. They aim to work with the CMA on proposed options. Three’s CEO mentioned that the current mobile market lacks strong competition.
There were security concerns due to Three being owned by CK Hutchison Holdings, a Hong Kong company subject to Chinese governance. The U.K. government approved the merger for security reasons, but other regulatory concerns remain under the CMA’s review.
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