The Competition and Markets Authority (CMA) has warned that Vodafone’s proposed £15 billion merger with Three could lead to price increases for “tens of millions” of mobile customers.

An investigation into the merger led by an independent inquiry group also found that if the merger goes ahead consumers could get a reduced service, including smaller data packages.

The CMA raised particular concerns that higher bills or reduced services would negatively affect those customers least able to afford mobile services, as well as those who might have to pay more for improvements in network quality they do not value.

Additionally, the investigation revealed that the merger could negatively impact Mobile Virtual Network Operators (MVNOs) such as Lyca Mobile, Sky Mobile and Lebara.

These companies are wholesale telecoms companies who rely on existing network operators to provide services. The regulator said that by merging Vodafone and Three, this would reduce the number of network operators from four to three, making it more difficult for MVNOs to secure competitive terms and potentially restricting their ability to offer the best deals to retail customers.

The CMA agreed with Vodafone and Three that the merger could improve the quality of mobile networks and bring forward the deployment of next generation 5G networks and services.

However, the competition watchdog suggested that these claims are “overstated”, and that the merged firm would not necessarily have the incentive to follow through on its proposed investment programme after the merger.

The authority will now consult on its provisional findings and potential solutions, with plans to issue a final report in December.

The merger of Vodafone’s UK business and CH Hutchison’s Three UK was first announced in June 2023, with the companies promising that the tie-up would provide British consumers with “a better network experience with greater coverage and reliability at no extra cost.”

The CMA launched its initial probe into the merger in April this year.

“We’ve taken a thorough, considered approach to investigating this merger, weighing up the investment the companies say they will make in enhancing network quality and boosting 5G connectivity against the significant costs to customers and rival virtual networks,” said Stuart McIntosh, chair of the inquiry group leading the investigation. “We will now consider how Vodafone and Three might address our concerns about the likely impact of the merger on retail and wholesale customers while securing the potential longer-term benefits of the merger, including by guaranteeing future network investments.”

National Technology News has reached out to Vodafone and Three for comment.

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