Vodafone, Three UK highlight benefits of their proposed merger

If the Vodafone-Three merger is approved, the new entity will reach 99% of the U.K. population with 5G Standalone (SA) networks

Executives from U.K. telcos Vodafone and Three UK unit said their $18 billion merger would benefit Britain’s consumers, infrastructure and jobs, according to a Reuters report.

Britain’s antitrust watchdog recently started to examine the proposed merger while lawmakers from the business and trade committee asked what the deal would mean for jobs, the report stated.

“We believe that actually jobs will be created as a consequence of this merger both for building the network, and to create and support the IT systems, and to maintain this new network,” Vodafone UK’s corporate affairs and sustainability director Nicki Lyons said.

Trade union Unite has warned the potential merger will result in higher bills and job losses, the report added.

Representatives from both the companies said they did not have the scale to invest and compete against the two biggest operators, BT’s EE and Virgin Mobile O2, jointly owned by Telefonica and Liberty Global. “Neither us nor Vodafone can invest sufficiently to build the type of 5G network that’s needed,” Three’s CTO David Hennessy said.

Also, Three’s general counsel Stephen Lerner said that the merger will not result in higher prices for consumers.

Last week, the U.K. Competition and Markets Authority (CMA) said it is providing an early opportunity for interested third parties to comment on the potential impacts that the proposed merger between Vodafone and Three could have on competition in the domestic telecom market.

The entity said that announcement represents a preliminary action ahead of launching a formal investigation on the proposed merger.

While it is customary for the CMA to investigate and decide whether a merger can proceed, it will consult telecom regulator Ofcom about the process.

Vodafone Group and CK Hutchison Group Telecom Holdings had previously entered into binding agreements in relation to a combination of their telecommunication businesses in the U.K. Under the terms of the deal, Vodafone will own 51% of the new entity while Hutchison Group will own 49%.

If the transaction is approved, the new entity will reach 99% of the U.K. population with 5G Standalone (SA) networks.

Vodafone CEO Ahmed Essam previously noted that Vodafone and Three could potentially reduce investments in the 5G field if local regulators block the proposed merger between the two telcos.

Essam indirectly warned regulators that a decision to block the attempted merger of Vodafone and Three UK would result in them cutting their investment in digital infrastructure and being unable to deliver on the U.K. Government’s goals in the 5G field.

Essam said that, without the merger, “we won’t be able to invest as much, and we won’t be able to deliver the 5G ambition that’s coming in the wireless infrastructure strategy from the government. It will just slow us down.” The U.K. Government’s new Wireless Infrastructure Strategy has laid out a goal for all populated areas in the U.K. to be covered by 5G Standalone networks by 2030.