Lutz Schuler warns that tie-ups can leave rivals with patchier links
The merger of Vodafone and Three, worth £15bn, could leave rivals with patchier internet connections unless the market power of their competitors is curbed. This was suggested by Virgin Media O2.
Lutz Schuler warned that the merger would give the combined company a too large amount of control over radio spectrum, which is used to operate mobile network.
He said: “We are aware of the logic behind the merger and the need to support economies-of-scale.
We could not support customers if a deal is made without a spectrum agreement and network sharing.
VMO2 warned of the dangers that the merger would bring to consumers, as a result of the stranglehold on spectrum by both companies.
The mobile spectrum is the radio frequency ranges that are allocated to operators of mobile phones and other communication businesses. Ofcom regulates the usage.
Spectrum is expected be a major bone of contention between rival operators before the planned Vodafone-Three merge, which would create UK’s biggest mobile network with over 27 million subscribers.
The combined company will hold just under 60% of the C-band frequencies and almost 50% of all mobile spectrum, which is a valuable spectrum deemed ideal for 5G.
VMO2 raised concerns about the transaction with the Competition and Markets Authority, which opened an investigation.
VMO2 has also been in direct talks with Vodafone and Three about a possible deal. Mr Schuler stated that regulatory intervention might not be required.
BT-owned EE will also likely ask for spectrum concessions in the context of the competition review.
In addition to spectrum, Mr Schuler called for assurances on the future of VMO2’s network sharing agreement with Vodafone.
Cornerstone Towers, the business of both companies, is where they jointly own mobile masts. VMO2 has sold a part of its stake to a £360m transaction last year. However, it still holds a 33pc share.
The warning by a major competitor will only add to the concerns over the merger of Vodafone and Three.
The CMA has been asked by MPs to conduct an in-depth review of the deal, amid fears that the reduction from four UK mobile operators to three may increase prices for consumers.
In 2016, regulators halted a proposed merger between O2 (now Three) and O2 on the basis of competition.
Vodafone and Three, however, have said that the market has evolved significantly since then. They also claim they need scale to continue investing in their network.
Vodafone’s chief executive Margherita della Valle stated at the Mobile World Congress, in Barcelona: “In Europe, consolidation of markets must be possible.” It’s not cost-effective in a world of 5G. “It makes no sense to run four 5G networks in parallel.”
They have committed to investing £11bn over the next 10 years in their UK 5G networks and creating up to 12,000 jobs. The companies have also claimed that the deal won’t increase prices for consumers.
Separately , the deal is currently being reviewed on grounds of national security due to concerns that Three’s Hong Kong based parent company CK Hutchison might gain access sensitive national infrastructure.
Mobile firms have dismissed the concerns and argued that CK Hutchison is on the UK market since two decades.