Three, Voda Promise £10-a-month Or Below Mobile Tariffs In Bid To Sway CMA On Merger

Vodafone and Three UK have pledged to maintain retail mobile tariffs at £10 or below for at least two years after their proposed merger, in response to a British watchdog's insistence their alliance would lessen local competition.

The £11 billion union, in which Vodafone will take a 51 percent portion of the merged entity and Three UK (part of CK Hutchison Holdings) the remainder, was announced in June 2023, and has since been subjected to intense scrutiny by the regulator, the Competition and Markets Authority (CMA).

Just weeks ago, the CMA voiced its concerns the merger would harm customers by hiking prices and negatively impacting the Mobile Virtual Network Operators that rely on the companies with infrastructure to run their own services.

Yet VodaThree not throwing the towel in yet, and this week reasserted their marriage is "pro-competitive" and "remain confident that outstanding issues can be resolved". They had until October 4 to propose remedies to assuage the fears specified by the watchdog.

On retail pricing, the duo said: "while our view is that the CMA's concerns about price increases are unfounded, we will commit to maintaining tariffs at £10 or below for two years from the completion of the merger for value-focused customers on the SMARTY brand, social tariffs on both the SMARTY and VOXI For Now brands, and continue measures to protect registered vulnerable customers."

There is of course nothing to indicate that prices won't jump after those 24 months. Mark Jackson, telco expert at ISP Review, described the commitment as "quite weak, particularly given how cheap some of the MVNO providers on Three UK's network are across tariffs in the £20 to £10 range as well."

He added: "how long will that continue post-merger?" and pointed out that "Vodafone's equivalent plans are much more expensive."

On the wholesale concerns, Vodafone and Three said "we will provide a reference offer that encourages MVNOs to access our additional network capacity."

This could turn out to be vital to securing approval, according to Kester Mann, Director of Consumer and Connectivity at CCS Insight.

"The reference offer for virtual providers could hold the key to unlocking approval. The devil will be in the detail, but maintaining a vibrant wholesale market with three network operators instead of four is vital to ensuring the UK retains its position as one of Europe's most competitive mobile markets," he told The Register.

The pair said they will continue to constructively engage with the CMA, and remain confident they can work with the regulator to secure its approval for the proposed merger.

This will include setting out comprehensively why the merger is pro-growth, pro-customer, pro-investment and pro-competition in their forthcoming response to the CMA's Provisional Findings document.

Vodafone and Three have previously asserted they are both currently stuck playing second fiddle to the two major players that dominate the UK market - BT/EE and Virgin Media O2 – and claimed their unification would result in a third big player able to compete on even terms.

Those big players also achieved their market dominance through mergers, VodaThree argues.

• UK watchdog fears Voda-Three merger will balloon phone bills for customers
• UK comms watchdog banning inflation-linked mid-contract price rises
• AST SpaceMobile promises the Moon with seamless satellite phone service
• BT speaks out against Vodafone and Three's mobile marriage plans

Mann, along with other analysts, appears to back this outlook on the issue.

"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," he said.

Whether this can sway the CMA, which remains chiefly concerned about likely price hikes for consumers, is unclear. The regulator's final decision on the matter is expected on December 7. ®