Vodafone Share News (VOD)

(Sharecast News) - The competition regulator has opened a formal investigation into the proposed £15bn merger between Vodafone Group and Three UK, it was confirmed on Friday.

The Competition and Markets Authority said the phase 1 probe would assess how the tie-up could impact competition in the UK market.

Sarah Cardell, chief executive of the CMA, said: "This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy.

"The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps."

Vodafone and Three UK, part of Hong Kong's CK Hutchison, announced they were joining forces in June 2023. Should the deal go ahead, it would create the UK's biggest mobile operator with around 27m customers.

It will also reduce the number of mobile network operators to just three, including British Telecom's EE and Virgin Media O2, which is jointly owned by Spain's Telefonica and Liberty Global.

In response, Vodafone and Three UK have pledged to invest £11bn over ten years to create standalone 5G networks.

In a statement, Ahmed Essam, chief executive of Vodafone UK, said: "We strongly believe that the proposed merger...will significantly enhance competition by creating a combined business with more resources to invest in infrastructure to better compete with the two larger converged players."

Three UK's chief executive, Robert Finnegan, added: "We are confident that this transaction will deliver significant benefits to our customers, the country and competition, and we look forward to working closely with the CMA."

Should the deal go ahead, Vodafone will own 51% and CK Hutchison 49% of the combined group, which will be led by Essam. Vodafone will also have an option to buy out the Hong Kong conglomerate three years post completion.

The CMA now has 40 working days to complete its Phase 1 investigation before publishing its findings and decides whether to proceed with a more in-depth probe.