Communications

The merger between Vodafone UK and Three UK, completed in 2025, created a new operator which plans to invest £11 billion in future network improvements. The deal, first announced in 2023, combined two of the UK’s four mobile network operators.

The reduction from four to three mobile network operators raised familiar concerns for competition authorities: fewer retail competitors potentially leading to price rises for consumers, and impacts on network access for other retailers. But it also offered a chance to shift how authorities approach merger assessments in high-investment, innovation-driven sectors.

Frontier advised Vodafone throughout the UK Competition and Markets Authority’s (CMA) review of the merger. We helped make the case for clearance by demonstrating the scale and credibility of the parties’ planned network investments, and the efficiency gains they would bring.

Shifting the frame: from short-term prices to long-term quality and innovation

European competition authorities had previously imposed structural remedies on  mobile mergers of this kind, particularly those that reduced the number of network operators from four to three, requiring new entry in the retail market. This made it essential to go beyond the focus on short term reductions in retail competition and reframe the debate around how the merger would unlock long-term improvements for UK consumers through greater investment.

Frontier supported Vodafone in presenting a detailed, verifiable analysis of the benefits from additional investment. This included:

• demonstrating that the investment plans were profit maximising for the parties
• quantifying how investment in the resulting joint network would improve speed, reliability and coverage and lead to price reductions
• modelling the overall impact of the merger; showing the expected gains to consumers from innovation and expanded network capacity more than outweighed the impact of any reduction in retail competition.

This efficiency analysis was a core part of the evidence presented at every stage of the CMA’s inquiry.

Ensuring credible commitments and measurable benefits

The CMA ultimately accepted that the merged entity’s Joint Investment Plan would generate efficiency gains through improvements to mobile network quality, and that these would strengthen competition in the longer term. However, the CMA also required binding commitments to ensure the full plan was implemented and consumers protected in the interim.

Our economic analysis supported both the recognition of these longer-term benefits and the design of short-term protections. These included temporary retail price caps and safeguards for wholesale access, intended to protect retail and wholesale consumers while investment was underway.

In clearing the merger in December 2024, the CMA signalled a new willingness to consider efficiency gains as part of merger assessment in investment-heavy sectors. Frontier’s work helped ensure that quality, investment and innovation were central to that discussion and to the outcome.

If you’re interested in finding more about how we explored these issues and how we helped our client, please contact media@frontier-economics.com or call +44 (0) 20 7031 7000.