REG - Vodafone Group Plc - VODAFONE & THREE RESPONSE CMA PROVISIONAL FINDINGS

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13/09/2024 07:15

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RNS Number : 1091E  Vodafone Group Plc  13 September 2024

VODAFONE & THREE RESPONSE TO CMA PROVISIONAL FINDINGS

13 September 2024

·    The Vodafone/Three merger is a once-in-a-generation opportunity to
transform UK digital infrastructure with £11bn of investment

·    Vodafone and Three UK disagree with the CMA's Provisional Findings
that their merger raises competition concerns and could lead to price rises
for customers

·    By all measures, the merger is pro-growth, pro-customer and
pro-competition. It can, and should, be approved by the CMA

·    This is not a final decision, and we look forward to working with the
CMA to secure approval

 

The combination of Vodafone and Three will fix the country's dysfunctional
mobile market characteristics, unleashing more competition and investment.

Opensignal analysis sets out the current reality: the UK ranks 22(nd) out of
25 European countries for 5G availability and speed and has the slowest data
speeds amongst the G7.

The merger of Vodafone and Three will transform this current reality, bringing
best-in-class 5G to every community, school and hospital in the country. The
CMA also recognises that the merger would improve network quality. We will
continue to work with them to demonstrate the merged company will deliver in
full on the committed network investment.

Vodafone and Three disagree with a number of elements in today's Provisional
Findings. A final decision is not due until 7 December, and we will continue
to positively engage with the CMA and look to resolve outstanding matters.

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.

"Great network connectivity is a critical enabler of so many elements of our
daily life and is central to the future prospects of so many sectors.
Businesses large and small are dependent on it and it enables new industries -
like AI - to thrive. It facilitates a step change in productivity and care
across the public sector, and it lies at the heart of every nation's future
prosperity."

Transforming the UK's telecoms infrastructure is vitally important for
businesses, the public sector, the UK's technological advancement, and the
government's stated mission to kickstart economic growth 1 .

 

50 million customers directly benefit from improved network quality

The merger will extend the network quality benefits well beyond the merged
company's own customer base to VMO2's customers - delivering better quality,
enhanced capacity and greater coverage to over 50 million mobile customers
across the country. We are encouraged by the fact that the Provisional
Findings acknowledge that our agreement with VMO2 2  "will provide a notable
and rapid increase in network quality for its wholesale and retail
customers" 3 .

 

 

Pricing

We do not agree with the CMA's provisional finding that prices will increase.
From the outset, we have been very clear that the merger will not affect our
pricing strategy and that all social tariffs will continue to protect the
vulnerable.

Importantly, the investment case underpinning the merger is not based on
hypothetical price increases and the CMA's price rise assumptions are contrary
to the business and investment plans the Parties have signed up to for the
merged company.

Prices will either stay broadly the same or actually drop post-merger as a
result of the vastly enhanced competitive pressures between Mobile Network
Operators and MVNOs, who will also benefit from the merger.

 

MVNOs

We disagree that this merger will adversely affect the wholesale market. Today
90% of the UK's MVNOs rely on either VMO2 or BTEE as their wholesale
provider.  A combined, stronger network would significantly boost competition
in the wholesale market by giving MVNOs more choice and better quality from
three scaled wholesale network providers.

 

Working with the CMA on the way forward

We are reviewing the Notice of Possible Remedies and look forward to working
constructively with the CMA on the different options proposed.  We are
confident we can address their concerns.

We have made clear we are committed to delivering our £11 billion investment
plan and best-in-class network which locks in the transaction's benefits and
addresses the CMA's provisional concerns. We are willing for this commitment
to be monitored independently and enforced by Ofcom.

By all measures, this merger is pro-growth, pro-customer, pro-investment and
pro-competition.  It can, and should, be approved by the CMA.

Robert Finnegan, Chief Executive of Three UK, said: "The current UK 4 player
mobile market is dysfunctional and lacks quality competition with 2 strong
players and 2 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 deserves.  We are determined to reassure the CMA in
relation to their provisional concerns and work with them to secure the
extensive benefits this merger brings for UK customers, businesses and wider
society."

 

 

For more information, please contact:

 

 Vodafone Investor Relations                    Vodafone Media Relations                                   Three UK Media Relations
 Investors.vodafone.com                         Vodafone.com/media/contact                                 Ed Cropley at Teneo

 ir@vodafone.co.uk (mailto:ir@vodafone.co.uk)   GroupMedia@vodafone.com (mailto:GroupMedia@vodafone.com)   +44 7942 949 346

 

Vodafone Registered Office: Vodafone House, The Connection, Newbury, Berkshire
RG14 2FN, England. Registered in England No. 1833679

 1  Kickstart economic growth - The Labour Party
(https://labour.org.uk/change/kickstart-economic-growth/)

 2 
https://www.vodafone.com/news/corporate-and-financial/vodafone-and-virgin-media-o2-announce-new-long-term-network-sharing-agreement
(https://www.vodafone.com/news/corporate-and-financial/vodafone-and-virgin-media-o2-announce-new-long-term-network-sharing-agreement)

 3  Para 62, Summary of Provisional Findings

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