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Update on Vodafone Investigation into New Deals in the UK

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The probe by Britain’s competition regulator into Vodafone’s proposed merger of British mobile phone operations with Three UK, owned by CK Hutchison of Hong Kong, has been intensified due to concerns over potential price hikes. The Competition and Markets Authority (CMA) initiated a formal investigation in January, and in a recent statement announced that it will conduct a thorough inquiry as both companies have not provided any reassurances to allay its worries.

Following their non-compliance, the CMA pointed out that the merger could significantly impact competition, potentially resulting in increased prices and diminished service quality for consumers. The watchdog had issued a warning last month and set a deadline until April 2 for responses, now deciding to proceed with an in-depth investigation.

In its Thursday statement, the CMA stated, “The expected joint venture is being referred by the CMA for a thorough investigation. Based on the available information, it is likely that this merger could substantially reduce competition within the UK market.”

Vodafone responded by referring to the regulator’s move as “an anticipated procedural step” and expressed certainty in the completion of the transaction, emphasizing that there would be no alterations in pricing. Both Vodafone and Three UK maintain optimism that the merger will strengthen competition within the mobile industry and enhance network quality and coverage for customers and businesses.

The proposed merger, which was announced in June last year, aims to establish the largest mobile operator in Britain with 27 million customers, facilitating the accelerated deployment of advanced 5G technology. With British telecom giant Vodafone holding 51% of the combined entity and CK Hutchison owning the remainder, the targeted value of the new group is £16.5 billion ($21 billion).

If approved, the merger will elevate the joint operations above the country’s primary mobile service providers, BT EE and Virgin Media O2, in terms of customer base. The progression of 5G technology in the UK has faced obstacles due to the UK’s restrictions on Chinese tech company Huawei, a key supplier of mobile network equipment.

AFP

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