UK Vodafone-Three merger approval hints at loosening M&A regulation

The news: The UK’s Competition and Markets Authority (CMA) approved the £15 billion ($18.65 billion) merger between Vodafone and Three UK, which will result in that country’s largest mobile operator. 

The two companies agreed to the merger in 2023 and will serve more than 27 million combined subscribers. It’s the latest example of the intensifying telecom consolidation trend and a possible indicator of easing regulation on M&As. 

Details of the deal: The merger—which is more like Vodafone’s takeover of Three—combines the smallest two of the UK’s four mobile carriers into the most dominant carrier by mobile revenue.

• Vodafone has the option to acquire the entire business after three years if it reaches a value of at least £16.5 billion ($20.52 billion), including debt.
• The combined business will invest £11 billion ($13.68 billion) over 10 years to create a standalone 5G mobile network.
• Although the consolidation could generate over £700 million ($870.3 million) in annual savings, it will likely result in rounds of layoffs as part of restructuring. 

Trendspotting: Telecom consolidation is an ongoing trend in the wake of market saturation and the slowdown in 5G market expansion. Europe’s 5G mobile connections make up 81% of total mobile connections, per GSMA—indicating that the region, the UK included, is nearing band saturation.

Short-term benefits: Consolidation allows telecoms to pool resources, reduce redundancies, and invest in infrastructure, especially in underserved areas. It could also improve network coverage if the operator prioritizes upgrades over profit margins.

Is M&A regulation cooling? The CMA’s approval suggests a loosening of Europe’s traditionally strict stance on potentially anticompetitive mergers, signaling openness to industry arguments that larger players are essential for innovation and global competition.

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