Vodafone and Three are in talks in the UK regarding a possible future merger that could create the biggest network in the UK.
The size of the merger is huge and surely to be of interest to the Monopolies Commission as it will mean the network will hold 27 million customers.
The current leaders are EE (BT) and O2 (Virgin Media), currently in the top 2 spots in the UK.
The reasoning behind the merger is claimed to be accelerating the rollout of 5G across the UK.
The companies have the end of the year in mind to make a decision on the potential merger.
The regulators have previously had very negative impressions on mergers of major networks, such as EE and BT, or Virgin Media and O2, this is because it reduces the variety and therefore increases the costs to the end user.
However, both Vodafone and Three have cited a recent Ofcom report, showing that the companies had delivered returns on investments that were lower than the cost of capital.
“By combining our businesses, Vodafone UK and Three UK will gain the necessary scale to be able to accelerate the rollout of full 5G in the UK, and expand broadband connectivity to rural communities and small businesses,” Vodafone said in an update to shareholders.
“The conditions to ensure thriving competition in the market need to be nurtured, otherwise the UK is at risk of losing the opportunity to be a 5G leader.”
Ofcom has also said that there is not currently a fixed position in relation to the market consolidation discussed.
“Our view is that potential mergers in telecoms markets need to be assessed on a case-by-case basis, rather than on a presumptive view of the appropriate number of competitors,” had been said in a report.