The investigations, scheduled to end in October, will examine impact on end-users and the thousands of businesses developing apps

“Apple and Google are able to exert considerable influence over much of the content, services, and technological development provided on mobile devices,” says the CMA.

Potential requirements could include Apple and Google opening up access to functionality needed by other apps to operate on mobile devices or enabling users to download apps and pay for in-app content outside of Apple’s and Google’s app stores.

Sarah Cardell, chief executive of the CMA, said:

“The operating systems, apps, and browsers installed on our phones and tablets act as gateways to the digital world—whether for communicating with loved ones, purchasing from businesses, or accessing creative content. More competitive mobile ecosystems could foster innovation and new opportunities across services that millions of people rely on, such as app stores, browsers, or operating systems. Greater competition could also boost growth in the UK by allowing businesses to offer innovative new products and services on Apple’s and Google’s platforms.

Strategic Market Status

Under the digital markets competition regime, the CMA may designate firms with ‘strategic market status’ (SMS) and can then impose or propose pro-competition interventions. The investigations will assess Apple’s and Google’s positions in relation to operating systems, app stores, and browsers, determining whether either firm holds strategic market status in these areas.

Approximately 15,000 businesses are involved in app development for mobile devices in the UK, generating an estimated total UK revenue of around £28 billion.

“Given the importance of mobile ecosystems to people, businesses, and the economy, it is critical that competition works well, Effective competition could ensure consumers and businesses are treated fairly by Apple and Google in relation to the terms and conditions they impose” said the CMA.

“Effective competition could also create open opportunities for businesses to innovate and deliver a range of content, services, and technological developments to consumers on mobile devices. This could include AI products and services, contactless payments through digital wallets, and new types of apps accessed via mobile browsers. In turn, this could support sustained growth in sectors of the economy that rely on mobile ecosystems.”

The CMA will focus on the extent of competition within Apple’s and Google’s mobile ecosystems: It will assess how competition functions across these ecosystems and identify any barriers preventing other competitors from offering rival products and services

Favouritism

The CMAwill see whether Apple or Google use their positions to favour their own apps and services, which are often pre-installed and prominently positioned on iOS and Android devices.

The investigation will assess whether Apple or Google impose unfair terms and conditions on app developers as a requirement to distribute their apps on Apple and Google app stores. It will also explore whether users are subjected to ‘choice architecture’ that makes it difficult for them to actively choose which apps to use on their devices.

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]]> https://mobilenewscwp.co.uk/news/article/competition-czar-investigate-apple-google-ecosystem-dominance/feed/ 0 https://mobilenewscwp.co.uk/news/article/vodafone-three-merger-gets-go-ahead-strings-attached/ https://mobilenewscwp.co.uk/news/article/vodafone-three-merger-gets-go-ahead-strings-attached/#respond Thu, 05 Dec 2024 09:10:22 +0000 https://mncwp.tailrd.cloud/vodafone-three-merger-gets-go-ahead-strings-attached/ The Competition and Markets Authority (CMA) has cleared Vodafone’s historic merger with Three. The deal will be completed in the first half of next year and is conditional on both companies signing binding commitments to invest billions to roll out a combined 5G network across the UK and cap tariffs and offer preset contractual terms

The Competition and Markets Authority (CMA) has cleared Vodafone’s historic merger with Three.

The deal will be completed in the first half of next year and is conditional on both companies signing binding commitments to invest billions to roll out a combined 5G network across the UK and cap tariffs and offer preset contractual terms to MVNO’s for three  years.

In September, the Phase 2 investigation of the merger found the could lead to higher prices for customers and poorer terms for MVNO’s. The CMA says the investment commitment and protections forretail and wholesale customers resolve its competition concerns.

The legally binding commitments require a joint network pla which sets out the improvements Vodafone and Three will make to their combined network across the UK over the next eight years.

The plan would boost competition between the mobile network operators in the long term, benefiting millions of people. The plan would be overseen by both Ofcom and the CMA, The merged company must publish an annual report setting out its progress.The CMA will; montor and enforcing the protections on consumer tariffs and wholesale terms.

The £11 billion network investment will require no public funding and, as highlighted by the CMA, will “boost competition between the mobile network operators in the long term, benefiting millions of people who rely on mobile services.

Vodafone CEO Margherita Della Valle said: “Today’s decision creates a new force in the UK’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves. Consumers and businesses will enjoy wider coverage, faster speeds and better-quality connections across the UK, as we build the biggest and best network in our home market. Today’s approval releases the handbrake on the UK’s telecoms industry, and the increased investment will power the UK to the forefront of European telecommunications.”

Canning Fok, Deputy Chairman of CK Hutchison and Chairman of CK Hutchison Group Telecom Holdings, said:

“We have been operating telecoms businesses in the UK for over three decades and Three UK for the past two. We have invested in the people and the infrastructure, helping to bring the benefits of mobile connectivity to UK businesses and consumers. When Three and Vodafone are combined, CK Hutchison will fully support the merged business in implementing its network investment plan, the cornerstone of today’s approval by the CMA, transforming the UK’s digital infrastructure and ensuring customers across the country benefit from world-beating network quality.”

“It’s crucial this merger doesn’t harm competition”

Stuart McIntosh, chair of the independent inquiry group leading the investigation, said:“It’s crucial this merger doesn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market. Having carefully considered the evidence, we believe the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed. But only if Vodafone and Three agree to implement our proposed measures”.

improvements

Kester Mann, Director, Consumer and Connectivity at CCS Insight  vsaid: “This mega-merger marks one of the most significant moments in the history of UK mobile, heralding the arrival of a new market leader with a combined 29 million customers.

 “The outcome – after months of intense regulatory scrutiny – is about as good as it could have got for Vodafone and Three. Not only did they secure approval, but the agreed remedies and commitments are less onerous than feared.

“The CMA’s decision to approve the merger is the right one and largely strikes a good balance between nurturing competition and encouraging investment. It should pave the way for more efficient investments to bring about much-needed improvements to mobile services in the UK.

“With approval secure, the hard work really begins. The merged company’s biggest task will be to combine two established mobile networks with a complex assortment of network suppliers. CEO Max Taylor will also face difficult decisions in areas such as brand, retail, jobs, and market positioning. Rivals should be ready to pounce if any stage of the integration goes awry.

“The outcome is a positive one for the broader European sector, which has been clamouring for greater leniency on mergers for years. It may give operators in other markets fresh confidence to strike new deals of their own.”

Matthew Howett, Founder & CEO, at Assembly Research commented:

“Today’s final report sets the wheels in motion for a transformation of the UK’s mobile market, and ultimately the experience for consumers. There is still a chance Sky may seek to challenge the decision, but a successful appeal to the CAT would be hard-fought, expensive and face a high bar. We expect positive implications overall, not only for investment in, and the quality of, networks (including standalone 5G), but also for the wholesale customers and consumers and businesses that rely on them.

“The remedies package and headline investment commitment mean that the CMA’s work in this case is not quite over – and for Ofcom it’s just getting started. While it will be incumbent on a combined Three/Vodafone to invest and implement the requisite customer protections,

“Ofcom will play a vital (and new) role with respect to oversight and enforcement. Importantly, the regulator seems emboldened to assume these responsibilities. Its monitoring will need to be carried out in an agile way as possible to ensure the merged entity is living up to expectations and to minimise any risk of circumvention or market distortions that some have warned about.”

Paolo Pescatore of PP Foresight said it would take “many years” before the full merits of the deal are realised

“Ahere’s a lot of tough decisions to come. Merging two networks is no easy feat. While there are past examples with BT/EE and VMO2 to draw upon, it’s not going to be smooth sailing.” Overall, it’s a big deal for both players, arguably even more so for Three given its business model would have been unsustainable in the long term.”

“Network leadership will make or break the success of the deal. How much of the so-called promises will be spent on actual networks, when 5G is already widely available. For now, EE still remains the benchmark when it comes to network leadership based upon recent developments and on fibre rollout through Openreach.”

“Rivals will have a window of opportunity to lure disgruntled customers during this painful integration process. Priorities will be implementing a successful strategy and choosing a brand that resonates with consumers and business. On this it is very hard to see the Vodafone brand disappearing from its home core UK market. Better price guarantees in the next few years will be a big pull for customers.”

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Sky has called the remedies suggested by the Competition and Markets Authority (CMA)  “weak” and “temporary.” The company argues that the measures fail to adequately safeguard competition in the mobile wholesale market, leaving MVNO’s like Sky Mobile vulnerable to higher costs and reduced service quality.

Sky’s Concerns Over CMA’s Proposals

In its response to the CMA’s remedies working paper, Sky criticised the provisional conclusion allowing the merger, contingent upon specific remedies. These remedies include an eight-year network integration and investment program by the merged entity, maintenance of certain tariffs and data plans for three years, and assurances to offer competitive terms for MVNOs.

Sky contends that these commitments are insufficient to prevent a significant reduction in competition. It points out that the merger would effectively shrink the number of wholesale mobile network suppliers, potentially leading to less favourable terms for MVNOs. Sky argues that this could result in higher prices or diminished service quality for MVNOs and their customers.

Call for Stronger Wholesale Price Regulation

Sky is advocating for stricter, long-term measures to ensure fair and transparent wholesale pricing. The company is demanding that the CMA implement clear and regulated pricing structures to prevent the merged network from imposing excessive charges on MVNOs. This, Sky claims, is essential to maintain a competitive landscape and protect consumer interests.

“Sky is disappointed with the weak, short-term wholesale remedy proposed by the CMA,” the company stated. “The CMA is taking a significant risk by relying on this weak remedy in the hope that sustainable competition will emerge after the network commitment is implemented.”

 Long-Term Risks to MVNOs

Sky also highlighted the potential for MVNOs to be sidelined under the current remedy framework. The company expressed concern that the short-term nature of the protections could leave MVNOs unprotected once the remedy expires. Sky further warned that the merged entity could use these remedies to “game” the market, potentially disadvantaging larger MVNOs.

“We strongly urge the CMA to err on the side of caution and extend the time frame of this protection,” Sky added. “The merger will set the permanent structure of this critical market, which affects millions of consumers and businesses, and threatens the feasibility of MVNO businesses.”

The CMA’s Balancing Act

The CMA faces a challenging task in balancing the benefits of a merged Vodafone-Three entity against the risks to competition. Proponents of the merger argue it would lead to greater investment in mobile infrastructure and improved services. However, critics like Sky warn that without robust, enforceable safeguards, the merger could harm competition, leading to fewer choices and higher costs for consumers.

Sky’s push for stronger, more transparent remedies underscores the high stakes of this merger for the UK mobile market. As the CMA prepares its final decision, the debate highlights the complex interplay between industry consolidation and the need to protect competition in rapidly evolving markets.

Sky full response to the CMA

They say they will also provide a pricing framework that encourages other MVNOs to access their additional network capacity. Upon approval of the merger, Vodafone and Three have also agreed to sell spectrum to Virgin Media O2.

Concerns

The Competition and Mergers Authority has concerns about price increases resulting from the merger of Vodafone and Three. But these are unfounded, say the two networks.

In a statement issued in response to the CMA’s findings that the merger could lead to price rises, both Vodafone and Three say they strongly believe the merger is pro-competitive and remain confident that outstanding issues can be resolved.

“Vodafone and Three disagree with the CMA’s Provisional Findings. Our merger will be pro-growth, pro-customer, pro-investment, and pro-competitive for the UK. It is a once-in-a-generation opportunity to transform UK digital infrastructure with £11 billion of network investment,” said a joint statement.

“We continue to constructively engage with the CMA and remain confident that we can work with them to secure approval. Our £11 billion network investment commitment will ensure UK customers enjoy one of Europe’s most advanced networks, and it will level the playing field with the two larger players to drive competitiveness. We are happy for Ofcom to monitor and enforce this commitment. The merger will extend the network quality benefits well beyond the merged company’s own customer base, by extending it to VMO2’s direct and MVNO customers.

“This agreement will deliver better quality, enhanced capacity, and greater coverage to over 50 million mobile customers across the country.. The CMA’s final decision on the merger is not due until 7 December, and we will continue to positively engage with them to resolve outstanding matters.”

Analyst Paolo Pescatore called the statement “unsurprisingly defiant.”

He added, “They still largely disagree with the remedies, but encouragingly show a clear willingness to work closely on a number of areas, such as the commitment to investment over the long term, a price freeze on selected tariffs under £10 for two years, and collaboration to increase competition in wholesale. It remains to be seen if the entity has done enough on pricing to ease the CMA’s concerns. This could be the sticking point that makes or breaks the deal. A path to approval exists, which is key for all parties.”

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The original period for the CMA’s report to be prepared and published was September 18. This has now been extended to December 7.

Inquiry group chair Stuart McIntosh stated that this was because the Inquiry Group considered it was no longer possible to complete the investigation and publish its final report by the September 18 deadline.

“In coming to that conclusion, the Inquiry Group has taken into account the following combination of factors, while also appreciating the need to be as comprehensive, thorough, and fair as possible within the tight statutory timeframe”

Macintosh said the factors that required the extension were:

Wide scope

“The wide scope of this inquiry and the technical and regulatory complexity of the sector, which has required the CMA to acquire a detailed technical understanding of the operations of the mobile network operators, mobile ‘virtual’ network operators, and the network sharing agreements between the MNOs.

Technical material

“The amount of technical material (including a Joint Business Plan and Joint Network Plan for the merged entity underpinned by detailed economic modelling) provided by the parties in support of their submissions regarding their ability and incentive to realize efficiencies—in particular, the parties’ merger simulations and sensitivity analysis (these were provided at such a time that the Inquiry Group was not able to take this evidence into account for the purposes of working papers shared with the parties, but will need to be considered in the Provisional Findings);

Network sharing agreement

” The public announcement on July 3, 2024 (after the Main Party Hearings), of the new Beacon 4.1 agreement between Vodafone Limited and VMED O2 UK Limited, which will require the Inquiry Group to assess the implications of the agreement, including gathering and analyzing further evidence from third parties; and the need to complete the CMA’s econometric estimation of consumer demand for mobile services, which is based on granular and voluminous third-party data.

Secial reasons,

“In the exercise of its discretion under section 39(3) of the Act, the Inquiry Group has decided that these factors fall within the category of ‘special reasons’ justifying an 8-week extension of the revised reference period.

“Following this decision, the period within which the report on this reference is to be prepared and published is now December 7, 2024. The Inquiry Group aims to complete the inquiry as soon as possible. As such, the report may be published in advance of this date”.

BT claims a merged network would have a disproportionate share of capacity and spectrum and says this is unprecedented in UK and Western European mobile markets. It argues that the merger will result in lower levels of investment in MBNL, the network-sharing joint venture owned by EE and Three, as Vodafone would have access to commercially sensitive information about BT’s investment plans. BT says this would “result in direct harm to BT’s ability to compete, through the Merged Entity’s participation in MBNL.”

BT asserts that the efficiencies claimed for the merger by Vodafone and Three were unsubstantiated and will not be passed on to UK consumers in the form of lower prices or greater investment.

In the executive summary of its submission, BT states:

“Overall, BT believes that the combination of extreme capacity and spectrum asymmetry arising from the Merger, along with the unprecedented access that the Merged Entity will have to BT’s (as well as to VMO2’s) strategic investment plans, and the Merged Entity’s ability and incentive to disrupt the effective functioning of MBNL, will give rise to a substantial lessening of competition in UK mobile telecoms markets, ultimately resulting in higher prices, poorer network quality, and reduced incentives to invest—all to the detriment of UK consumers. BT agrees with the CMA’s findings in its Phase 1 Decision that the Merger raises serious competition concerns.”

BT says the Merger will create a network with a dominant 61 percent share of UK mobile network capacity (spectrum and cell sites combined).

“As a result, the Merged Entity would be able to credibly threaten to deploy capacity strategically to undermine the business case and therefore reduce the incentive for rivals to invest in their respective mobile networks. Knowing this, the Merged Entity is likely to withhold rather than invest in deploying its own capacity, potentially resulting in levels of investment, innovation, and quality materially lower than would be the case absent the Merger” claims BT.

The CMA has ruled the merger now requires further investigation with a six-month probe run by a panel of outside experts.

The decision was expected by Vodafone and Three who remain confident that the transaction will deliver significant benefits for competition, customers, and the country.

The CMA launched its initial 40-day Phase 1 investigation in January to identify whether the deal may lead to a ‘substantial lessening of competition’. The investigation focused on the potential impact on consumers and businesses in the UK. It will now go to Phase 2 where an independent panel of experts will look at the concerns flagged during the 4-day examination.

“The CMA is concerned that combining these two businesses will reduce rivalry”

Vodafone UK and Three UK have five working days to respond with meaningful solutions to the CMA; otherwise, the deal will be referred to a more in-depth Phase 1.

The CMA is concerned the deal could lead to mobile customers facing higher prices and reduced quality. It said:

“The CMA’s Phase 1 investigation found that Vodafone UK and Three UK provide important alternatives for mobile customers. Three UK is also generally the cheapest of the four mobile network operators. The CMA is concerned that combining these two businesses will reduce rivalry between mobile operators to win new customers.

“Competitive pressure can help to keep prices low, as well as provide an important incentive for network operators to improve their services, including by investing in network quality. The CMA is also concerned that the deal may make it difficult for smaller mobile ‘virtual’ network operators such as Sky Mobile, Lebara, and Lyca Mobile to negotiate good deals for their own customers, by reducing the number of mobile network operators capable of hosting these ‘virtual networks’.

“When announcing their deal last year, both Vodafone UK and Three UK claimed that combining both businesses would result in significant benefits to customers as well as speed up the deployment of new technologies.

“These types of claims can sometimes justify clearing a deal that would otherwise raise competition concerns. Vodafone UK and Three UK’s claims are based on a number of assumptions about how they will combine and invest in their networks post-merger. The CMA considers these assumptions need more detailed assessment, particularly given the CMA’s concerns that the merger may reduce mobile operators’ overall incentives to invest in their networks”.

“Our initial assessment of this deal has identified concerns which could lead to higher prices”

Julie Bon, Phase 1 decision-maker for this case at the CMA, said:

“Millions of people in the UK depend on effective competition in the mobile market in order to access the best deals for them. Whilst Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims.

“Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks. These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions.”

A joint statement from Vodafone and Three pointed out: “Vodafone UK and Three UK remain confident that the transaction will deliver significant benefits for competition, customers, and the country.

“The current market structure has resulted in the quality of mobile network services in the UK lagging significantly behind other European countries (see footnotes). Vodafone UK and Three UK are sub-scale, unable to cover their cost of capital, and constrained in their ability to invest and compete effectively against the two market leaders. As a result, customers and businesses are missing out on the benefits offered by enhanced digital connectivity.

“The merger will create a third Mobile Network Operator with scale, able, and incentivized to invest fully in a best-in-class network. Millions of customers across the UK will benefit from day one, thanks to a step-change in network quality, speed, and coverage. A combined network would also boost competition in the wholesale market, by offering greater choice to MVNOs, the fastest-growing segment of the UK’s mobile industry.

“We will review the potential concerns raised by the CMA and look forward to continuing to engage constructively with them as we set out the benefits of the merger for competition and for UK consumers and businesses”.

Current Vodafone UK CEO Ahmed Essam, said: “Having reached this important milestone, we look forward to working with the independent panel on the Phase 2 process. By merging our two companies, we will be able to invest £11 billion to help the UK realize its ambitions to be a world leader in next-generation 5G technology, and increase competition across the industry. “This transaction will create an operator with the scale required to take on BT and VMO2, give MVNOs greater choice in the wholesale market and is in the wider interests of customers, competition, and the country.”

Three UK CEO, Robert Finnegan, said: “The current market structure is holding the UK back, which is not good for customers or competition. By creating a third player with the necessary scale to invest, the combination of our two companies will deliver one of Europe’s most advanced networks and move the UK into the digital fast lane, benefiting customers from Day One.”

While the merger seems to be beneficial, it’s far from approved yet. And it’s a process that could take as long as 18 months, with approval from the CMA not a given. It will take months before we know the answer.

The merger will create a network covering more than 99 per cent of the UK population with its 5G standalone network by 2034, offering a superior experience for consumers. It also commits to continung with social tariffs and has pledged to help six million people overcome the digital divide by 2025.

But there’s more to it than just supporting the government’s 5G ambitions and vulnerable people. This positioning is likely an attempt to appease the Competition and Markets Authority (CMA) to approve the proposed merger. Vodafone has been under pressure to improve its performance. There has been a significant drop in share price and an increasing net debt figure, as well as the announcement to cut 11,000 jobs in May 2023.

How likely is approval? Vodafone and Three are using 5G is the key driver for the regulators to approve their proposition. But this it will be challenging to convince the CMA of this. Recent data from Uswitch does not provide any compelling case that 5G delivers any value to consumers.

This is because 4G is more than sufficient for most consumer telecoms needs. Less than half of 5G users in the UK say they have experienced improvements in speed or reliability. It’s also proving challenging to find evidence of any value of 5G to operators too, due to the heavy cost of investment and the struggle to get a return.

This doesn’t mean that regulators won’t buy it. BT and EE successfully in 2016, and Virgin Media and O2 did the deed in 2021. If these operators have been allowed to merge, surely Vodafone and Three will as well. If they don’t, merge there are concerns they’ll be unable to compete with their two competitors. Merging gives scale and footprint to effectively compete. An evenly-matched competitor is likely to result in greater competition and cost savings for consumers on any of the three MNO networks.

So, how would this merger impact industry, consumers and businesses? A lot is unknown. Three and Vodafone have fairly different brand perspectives. Vodafone’s image is of a corporate, business-oriented operation. Three targets young users with wit attractive data packages. Will these two cultures combine or be replaced by a new market position?

It’s also worth considering how the merger would affect the spectrum split. Vodafone and Three hold as much as 49 per cent of all licensed bands, Mobile networks have to balance their spectrum holdings to provide coverage, capacity and demands for different services and locations across all networks. A spectrum review may be required to ensure that the proposed merger doesn’t result in the new single entity dominating certain bands.

How this will affect network sharing agreements? Mobile Broadband Network Limited is a 50-50 joint venture between EE and Three UK, and Cornerstone Telecommunications Infrastructure Limited is a 50-50 joint venture between O2 and Vodafone. If the merger goes ahead, will Three be able to use CTIL’s infrastructure and Vodafone use MBNL? How this will play out? If one operator is involved in both UK sharing network agreements, this could have a negative impact on competition and enable information exchanges.

Having looked at all the issues, the Vodafone Three merger will most likely go ahead, although its form is undoubtedly going to change. There may be consumer benefits from larger 5G network. But there are many concerns around how it might impact the market.

Mobilise was formed in 2011 by Hamish White as Mobilise Consulting, building consulting for MVNOs around the world, launching and growing MVNOs and working with companies such as FreedomPop and Dixons Carphone.

Three UK CEO, Robert Finnegan, and Vodafone UK CEO, Ahmed Essam (main pic) have put more flesh on the bone of the historic merger.

Both confirmed there will be no change to each operator’s pricing strategy and that a multi-brand strategy will continue with Vodafone and Three continuing under their own names .

No change to each operator’s pricing strategy and a multi-brand strategy will continue

Economies of scale will enable the UK’s new third network to bring 5G coverage to more than 99 per cent of the population by 2034 and similar geographic coverage by 2027.

They claim that the UK businesses’ digital transformation will get a boost with improvements to production efficiency from full 5G access while energy consumption will be reduced by enabling business to install more energy efficient 5Ge smart technology to reduce their emissions?

“The merger creates a third network operator with scale and creates more effective competition to the market leaders to become an even more effective challenger on home broadband, accelerating the availability of fixed wireless access to complement the UK’s fibre footprint” said Essam.

Both of the businesses will compete as usual on a stand-alone basis until the merger is complete. So customers should not expect any changes to their plans and prices, They have pledged continuation of support on social tariffs to ensure there are o price rises on these tariffs. In the contract-free market there will be no price rises.

Finnegan said he was confident the regulatory bodies would not stop the merger.

“Ofcom identified that investment is very important in the industry. We’re both investing more than we are generating and that is not sustainable. I think Ofcom and the CMA recognise that and that this is an opportunity to correct what is a dysfunctional market. This is a way of creating a really strong third player that has scale and is wiling to invest £11 billion which is way more than any of the other operators. And that’s got to be good for consumers, The devil is in the detail, We will be engaging with the CMA in due course and listen to what their concerns are and move forward.”

this is an opportunity to correct what is a dysfunctional market.

Added Essam added: “If you reflect on where the market was five years ago and where we are today clearly it is a very different market. What materially changed is the MVNO market which is competitive. MVNO’s enjoy a market share of more than 16.5 per ent. It is very different from the position five years back. This changes the competitive landscape and makes our case very strong and which will bring our transaction over the claiming weeks to the CMA”.

The Three China connection is not seen as an obstacle for security concerns as it did with Huawei.

“We work with the security bodies and they have no concerns about our operations. This will be Hutchison taking a 49 per cent stake. So we don’t see an issue here”, said Finnegan.

Essam emphasised that both networks are already heavily regulated in the UK and adhere to strict compliance on customer data.

“We both abide by customer privacy regulations, Clearly the deal will be subject to national security approvals. We are on a good position to take this case to the security agencies and bodies”

Vodafone and Three have agreed their marriage. But they still require regulatory approval and there is already precedent for the authorities rejecting such massive consolidation.

In 2016 The European Commission blocked the proposed acquisition of O2 by Hutchison under the EU Merger Regulation. The EC had strong concerns that UK mobile customers would have had less choice and paid higher prices as a result of the takeover, and that the deal would have harmed innovation in the mobile sector.

However the launch of 5G does mean regulators are mindful that carriers lack the scale to generate sufficient returns on their capital. However there is also government pushback against any ownership of telecoms infrastructure by Chinese companies. The National Security and Investment Act, gives the state the authority to intervene and reject the deal

CCS Insights Kester Mann says the deal is “poised on a knife edge and is too difficult to call either way”

“It’s a huge decision for Sarah Cardell, the CMA’s new CEO, who in a recent speech rejected the idea that her body has been overly interventionist in blocking deals”

Erhan Gurses Equity Research Analyst at Bloomberg Intelligence, said: “The push for consolidation is seen as positive for the broader industry, although the question remains whether it will receive antitrust approval. The odds of approval have improved. The Competition and Markets Authority (CMA) may also consider striking a delicate balance between the sector’s investment requirements for 5G roll-outs and consumer welfare. It is worth noting that mobile prices in the UK have remained relatively low compared to other major European markets like Spain or Germany.

But PP Insight analyst Paolo Pescatore believes the deal will “be a hard sale given that both companies have been outperforming the market for the last year or so

“Let’s see if the authorities have a change of heart. Both parties need to demonstrate that this is genuinely in the interest of UK plc, the economy, and consumers for it to have a chance of getting over the line. Ofcom recognises the challenges of the UK mobile market and the need for scale. Convincing the CMA will be the real test. Current investment levels are not sustainable in the longer term.”

“Vodafone and Three may have shot themselves in the foot by recently hiking tariffs by up to 14.4 per cent but the deal should be approved. It is better to have three strong providers than two that are dominant and two that are sub-scale. Blocking it could thwart the long-term development of the UK’s telecoms infrastructure.”

CCS Insight’s Kester Mann believes getting approval will be a challenge.

““This represents the biggest shake-up in the UK mobile market for over a decade. The deal makes plenty of sense as both providers are sub-scale. As separate entities, it would have been near impossible for either to grow enough organically to come close to challenging BT or Virgin Media O2 for size. Inevitably however, there will be widespread fears over job cuts..

“An £11 billion network investment plan will seek to allay regulatory concerns. But this deal will still face a major challenge to win approval. At this stage, I believe it is too difficult to call either way.

“The prospect the deal leads to higher prices will be a major concern for the CMA. Vodafone and Three may have shot themselves in the foot by recently hiking tariffs by up to 14.4 per cent . The deal should be approved. It is better to have three strong providers than two that are dominant and two that are sub-scale. Blocking it could thwart the long-term development of the UK’s telecoms infrastructure.”

“The recent appointment of Margherita Della Valle as Vodafone group CEO will give added impetus to the deal. She has shown clear intent to make changes at Vodafone as she bids to turn the embattled company’s performance around. Securing approval for a tie-up with Three would be a major boost to her early tenure.”

Pescatore thinks the security issues regarding China will be dealt with and overcome .

“Hutchison already has an extensive presence in the UK, but this should be seen as a gradual exit from the telco market. Having the current Vodafone UK CEO heading up the new operation is a testament to this belief. His considered approach will resonate with key stakeholders and improve any chance of getting the deal over the line.”

Dan Ridsdale, Director of Technology Media and Telecoms, at Edison Group, said Vodafone’s statement g read like an overt pitch to convince the CMA, Ofcom, press etc that there would be benefits for customers, country and competition, before looking at deal synergies.

“Management will have a good level of insight into the opinions of key investors regarding the deal, whereas regulators play their cards much closer to their chest. For the CMA, the equation is likely to come down to how much they take into account the consumer benefits from the promised acceleration to the roll out of 5G, gained through economies of scale versus the competitive risks from concentrating market power.

“They will almost certainly consult Ofcom as part of the process who have already highlighted that Vodafone and Three’s poor return on capital under the current market structure presented a risk to future investment in the UK’s networks.”

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