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Five Business Days For VOD & Three To Offer Remedies To Avoid Merger Probe

COMMUNICATIONS


  • VOD spreads yet to stream, CKHGTH EUR spreads muted
  • CMA concerns include the merger leading to higher prices and less network investment should the new entity dominate, especially impacting 3UK's aggressive market strategies and pricing.
  • They note the merger might weaken MVNO negotiation positions for network access and raise issues about shared network arrangements. Despite promises of network improvements and investments, the CMA questions the merger's efficiency claims. Without clear benefits, a detailed phase 2 review could be next (potentially taking as long as 32 weeks) if remedies aren't proposed by 02 April.
  • The market is expecting regulatory approval given that the deal has been approved in Europe (though the impact there is far less), the competitive pressures currently faced by both VOD & Three in the UK and given that four-to-three mergers are generally allowed elsewhere. VOD and Three have promised a lot from the merger in terms of synergies and CapEx commitments which the CMA seems to be questioning. While remedies are normal in these processes, the extent to which VOD and Three now have to offer up spectrum or access will determine the final economics of the deal.
  • https://www.gov.uk/government/news/vodafone-three-deal-could-leave-consumers-and-businesses-worse-off
  • https://assets.publishing.service.gov.uk/media/65fc9b4ba6c0f7001aef921c/Summary_of_phase_1_decision_pdfa.pdf
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