Vodafone’s CEO said that if the proposed merger with Three is blocked, it will mean ‘even more constrained’ investment
U.K. carrier Vodafone said that the new U.K. government will fail to achieve its promise of nationwide access to 5G technology by 2030 if the proposed merger between Vodafone and Three U.K. is blocked, local newspaper The Guardian reported Vodafone UK’s CEO Margherita Della Valle as saying.
In its election manifesto, the government said nationwide 5G coverage was needed by the end of the decade because the U.K. was falling behind other countries in terms of the investment and rollout of advanced mobile networks, according to the report.
“Everyone now talks about [things like] artificial intelligence, all of these things cannot happen without good networks,” Della Valle said.
“All policymakers understand now the importance of having good quality networks. Look at Labour’s manifesto, for example … nationwide 5G by 2030. There is no doubt that a catalyst is needed to get there because it’s not going to be done [by the current market],” the executive added.
She also told The Guardian: “We don’t have the scale to invest, especially for something like 5G across the board, which is what the U.K. needs,” she was quoted as saying.“The cost [of the deal being blocked] is even more constrained investment. [The deal] is going to close between now and the end of the year but the next few months are going to be the critical ones.”
In May, the U.K government released a “publication of notice of Final Order” that provisionally approves the merger of Vodafone and Three, subject to certain conditions.
The U.K.’s Competition and Markets Authority (CMA) launched the initial phase of an antitrust investigation in January after the entity was notified by the two carriers about the proposed merger. This initial review is designed to identify whether the deal may lead to a “substantial lessening of competition” and therefore requires an in-depth, phase 2 investigation. Phase 2 investigations, which started in April and are expected to conclude in September, allow an independent panel of experts to probe in more depth initial concerns identified at phase 1, the CMA explained.
The CMA previously highlighted that it has concerns that the deal could lead to mobile customers facing higher prices and reduced quality.
Vodafone and Three UK had previously said that the decision by the CMA to carry out a new in-depth review of their proposed merger was in line with the expected timeframe for completion of the transaction. In a joint statement, the two telcos said they remain confident that the transaction will deliver significant benefits in terms of competition.
Last year, Vodafone UK, which is owned by Vodafone Group and Three UK, owned by CK Hutchison Holdings, had announced a new joint venture agreement that would bring their operations under a single network provider. Under the terms of the proposed merger, Vodafone will own 51% of the new entity while Hutchison Group will own 49%.
“It is a really big decision for the U.K., a big industrial policy decision,” Della Valle said. “Everyone thinks about the impact on telcos. The reality is our industry is one of a handful that impacts on many other sectors, on everyday life. It is critical for economic growth more broadly.”
Della Valle also said that if the merger was not approved, Vodafone would be forced to cut investment further.
“We don’t have the scale to invest, especially for something like 5G across the board, which is what the U.K. needs,” she said. “The cost [of the deal being blocked] is even more constrained investment. [The deal] is going to close between now and the end of the year but the next few months are going to be the critical ones.”
The other two operators in the country are EE, owned by BT, and Virgin Media O2.
