Britain's competition regulator has launched an investigation into Vodafone and Three's planned merger to create the UK's biggest mobile phone operator.
The Competition and Markets Authority (CMA) now has up to 40 days to review the deal and decide whether it warrants a full and detailed investigation on competitive grounds.
CMA chief executive Sarah Cardell said: “This agreement brings together two leading players in the UK telecommunications market, which are vitally important to millions of everyday customers, businesses and the wider economy.” .
In another move earlier this week, the government said Vodafone shares held by the United Arab Emirates-backed telecoms group posed a national security risk to the UK.
The Cabinet Office said late on Wednesday that Emirates Telecoms, also known as e&,'s 14.6% stake in Vodafone amounted to security concerns given Vodafone's strategic role in UK telecommunications services. A warning notice was issued.
The company has now ordered Vodafone to establish a “National Security Committee”, which will oversee and monitor sensitive work that could affect national security.
In 2016, the CMA and the European Commission blocked Three's attempt to take over O2 due to the risk of price gouging.
However, in 2022, UK telecommunications regulator Ofcom changed its long-held stance and said it was now more open to consolidation in the sector. The company has previously argued that narrowing its domestic network to three could harm consumers.
Vodafone UK has a number of government contracts, and Three UK is owned by Hong Kong-based CK Hutchison, so it has access to significant national assets, especially given the city's status as part of China. Concerns may arise about foreign co-ownership.
Vodafone UK has public sector contracts with the Ministry of Defense, Ministry of Justice, NHS 111 and local police forces.
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Vodafone UK chief executive Ahmed Essam said: “We strongly believe that the proposed merger between Vodafone and Three will create a combined business that will be able to invest more resources in infrastructure, significantly increasing competition. ' said Vodafone UK chief executive Ahmed Essam.
Both companies are the third and fourth largest telecommunications operators in the UK respectively. Once the merger is complete, the new combined company will have more than 27 million subscribers, surpassing BT's EE, Spain's Telefonica's Virgin Media O2 and US-listed Liberty Global.
Robert Finnegan, Three UK's chief executive, said: “We are confident that this transaction will deliver significant benefits to our customers, countries and competitors and will continue to work closely with the CMA as they review our notice. I look forward to working together.”
