(Bloomberg) -- Vodafone Group Plc and CK Hutchison Holdings Ltd.’s Three told antitrust regulators they’ll keep a £10-per-month plan available for two years if the companies are allowed to merge in the UK.
A £10 tariff will continue to be available on the Smarty brand, currently operated by Three, for at least two years after the completion of the merger, they said in a response to the UK’s Competition Markets Authority published Monday.
Vodafone and Three are working to ease regulators’ concerns that their combination could drive up consumer prices and costs for MVNOs, operators that license and resell network capacity from the major telecom operators. The CMA is due to make a final decision on the £15 billion ($20.1 billion) combination, which would create the largest mobile operator in the country by revenue, by Dec. 7.
The two companies’ ability to assuage the CMA’s concerns on consumer prices could be a “sticking point that makes or breaks it,” Paolo Pescatore of PP Foresight said. “It remains to be seen if the entity has done enough on pricing to ease the CMA’s concerns.”
The companies reiterated that they disagree with the CMA’s findings that the deal could risk higher prices in the UK, and have already offered other remedies. Those include having regulators monitor their commitment to spend £11 billion on network upgrades and announcing a plan to sell spectrum to the UK’s second-largest operator, Virgin Media O2, if the merger is approved.
The two telecom operators also agreed to create a list of set wholesale prices for MVNOs, based on the size of the resellers, which will keep prices low for the smaller operators, they said.
Vodafone shares fell 0.5% to 75.22 pence in London trading at 12:15 p.m. The stock has gained 9.7% this year.
(Updated with additional context from fourth paragraph)
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