Robert Finnegan, CEO of Three, has criticised the UK’s antitrust authority, the Competition and Markets Authority (CMA), after it raised concerns about Three's £15 billion merger with Vodafone, suggesting it could lead to higher customer prices.
In its provisional view of the merger published today (September 13), the CMA suggested the deal would “negatively affect” customers least able to afford mobile services and would negatively impact ‘wholesale’ telecoms customers.
In a LinkedIn post, the Three CEO argued the prospective merger is “pro-growth, pro-customer and pro-competition” and called on the CMA to approve it.
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“The current UK four-player mobile market is dysfunctional and lacks quality competition with two strong and two weak players,” Finnegan said.
“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 deserves.”
The CMA will now consult on its provision findings before coming to an ultimate decision on the merger which will be published by December 7 2024.
Stakeholders looking to comment on the provisional findings have until October 4 to submit their views.
Three CEO Finnegan said both companies will look to “reassure” the competition authority over its concerns, pledging to work with the CMA to “secure the extensive benefits this merger brings for UK customers, businesses, and wider society.”
The CMA delayed publishing the results of the initial investigation into the merger due to the “very wide scope” of the deal involving “technical and regulatory complexities of the sector”.
Kester Mann, analyst and director of consumer and connectivity at CCS Insight, said the findings “make for uncomfortable reading” for the parties, but the CMA hasn’t shut the door on the deal yet.
“The CMA offers a potential path to approval through a range of remedies. Crucially, it appears willing to consider ‘behavioural remedies’ such as enhanced network access for virtual providers or safeguards for retail customers.
"This is significant as many had feared that more onerous “structural remedies" – such as selling assets or supporting a new entrant – would be required. In this sense, Vodafone and Three should be encouraged by the tone of the CMA’s report which appears more open to the merger than I was expecting.”
Paolo Pescatore, tech, media and telco analyst at PP Foresight, said that the CMA’s initial findings on pricing implications for consumers were “as expected.”
“Focusing only on price ignores the fact that the merger will bring much-needed investment across the UK,” Pescatore told Capacity. “Even if the price increase is to be believed, which the companies dispute, it's pence per month and doesn’t in any way outweigh the benefits of building the network the country deserves.
“To date, both parties are demonstrating that this is genuinely in the interest of the UK, the economy, and users which pave the way for a far stronger three player market than the current imbalance."
According to Mann, said the ball is very much in Vodafone and Three’s court.
“They need to quickly assess these proposals and make further suggestions ahead of a final deadline in early December,” Mann said. “The next three months may prove to be the most pivotal in the history of the UK telecoms sector.”
"I retain my view that approving the merger would be the best outcome for the future of the UK mobile industry. A combined Vodafone and Three can make more efficient investments and push BT and Virgin Media O2 to raise their game too, boosting the market’s long-term connectivity credentials."
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