The proposed merger of Vodafone and Three could lead to “higher prices” for millions of customers.
Their planned £15 billion deal could now be subject to an in-depth investigation, with the UK’s competition watchdog warning it could result in a potential cost hike to users.
The combined group would be Britain’s biggest mobile network with about 27 million users, and the companies said the merger would result in an additional investment of £11 billion in the UK.
But the Competition and Markets Authority’s deputy chief economic adviser Julie Bon said she had “identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks”.
She added: “These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions.”
The regulator also has fears the deal may make it more difficult for smaller mobile providers such as Sky Mobile and Lyca Mobile, who rent space from the bigger operators, to get a good deal.
Vodafone’s UK chief executive, Ahmed Essam, insisted the deal would allow the companies to create an operator with the scale required to take on the current two biggest network providers in the UK.
Three’s UK chief executive Robert Finnegan said a merger would “move the UK into the digital fast lane” and allow for increased innovation which he said would benefit customers “from day one”.
Three and Vodafone have already announced they will introduce a 7.9 per cent increase to the cost of many contracts in April, as part of hikes from many providers being slammed by customers and consumer groups amid the cost of living crisis.
Analyst Kester Mann from CCS Insight told the BBC about Vodafone and Three’s proposed merger it looks like an “ill-timed move that may not sit well with the Competition Watchdog”.
