Vodafone and Three merger 'could increase bills for millions of users'

Vodafone and Three logos
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Mobile phone merger between Vodafone and Three could increase bills for millions of users, the UK’s competition watchdog has found.

The networks say they disagree with the Competition and Markets Authority (CMA) which has been investigating the £15 billion deal since last summer. A joint agreement would create the largest mobile phone network provider in the UK with some 27 million users.

Vodafone and Three argue the merger would allow them to increase investment and compete with major rivals. However, the regulator says there's a worry the merger would lead to tens of thousands of people paying more for their mobile phone bill, or customers may get a reduced service such as smaller data packages.

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The CMA says it has concerns over price hikes or reduce service would affect people who are least able to afford a phone, the PA News Agency reports. It also said customers could end up paying more for improvements to services they do not value.

On the other hand, the merger could improve the quality of mobile networks and accelerate the next generation of 5G services being rolled out.

CMA had concerns the firms were overstating claims they would plug £11 billion worth of investment in the country's infrastructure as there might not be the incentive to follow through with the promises once the merger completes. Combining the firms would reduce the number of network operators from four to three, with only EE, BT and Virgin Media-O2 left.

Virtual operators such as Sky Mobile, Lyca Mobile and Lebara could be negatively impacted as they "piggyback" off big operators to provide their own services.

Stuart McIntosh, chair of the inquiry group leading the CMA’s investigation, said: “We’ve taken a thorough, considered approach to investigating this merger, weighing up the investment the companies say they will make in enhancing network quality and boosting 5G connectivity against the significant costs to customers and rival virtual networks.”

He said it will now consider how the firms plan on addressing the CMA’s concerns, including by “guaranteeing future network investments”.

Before a final report in December which will be issued by CMA, Vodafone and Three have the opportunity to share solutions. However, the businesses disagree with the regulator's concerns and say the merger will fix the "dysfunctional" mobile market in the UK.

They also dispute price increases, arguing they will broadly stay the same or drop post-merger. Margherita Della Valle, Vodafone’s chief executive, said: “Our merger is a catalyst for change.

“It’s time to take off the handbrake on the country’s connectivity and build the world-class infrastructure the country deserves. We are offering a self-funded plan to propel economic growth and address the UK’s digital divide.”

Robert Finnegan, Three UK’s chief executive, said: “The current UK four-player mobile market is dysfunctional and lacks quality competition with two strong players and two weak players. This is reflected in the current state of the UK’s digital infrastructure that everyone agrees falls well short of what the country needs and deserve.”

The firms also stressed it was not a final decision and they plan on working with the CMA to reassure it of their plans and secure approval.

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