Vodafone Group PLC on Monday said it disagree with the UK competition watchdog, which earlier this month said the proposed merger between Vodafone UK and Three UK would lead to price increases.
The Newbury, England-based telecommunications company insisted that the merger ‘will be pro-growth, pro-customer, pro-investment and pro-competitive for the UK.
‘It is a once-in-a-generation opportunity to transform UK digital infrastructure with £11 billion of network investment.’
Vodafone added: ‘While we do not agree with the CMA’s provisional findings that prices will increase, we continue to explore how we can answer its concerns.’
Besides a planned £11 billion network investment commitment, Vodafone said it will extend the network quality benefits beyond the merged company’s own customer base, which it said will deliver enhanced coverage to over 50 million mobile customers across the UK.
Vodafone and Three aim to complete a merger, after the two telecommunications providers agreed a £15 billion deal last summer which would create the UK’s largest mobile phone network.
Vodafone on Monday said shareholder approval will no longer be required for the merger, as the deal now classifies as a ‘significant transaction’ under new UK listing rules issued in late July.
According to the deal, Vodafone will own 51% of the merged UK business, while Hong Kong-based CK Hutchison Group Telecom Holdings Ltd will own 49%. The merged business will be consolidated in Vodafone financial statements, it explained, with initial debt financing provided, though group gearing will not be affected.
In additional to regulatory approvals, the UK merger is still subject approval from CK Hutchison shareholders.
Vodafone on Monday also noted that its Italian business sale does not require shareholder approval either under the new UK rules. The Italy business sale is expected to have a broadly neutral impact on net assets, it said.
Vodafone shares were down 0.2% at 75.48 pence each on Monday morning in London. CK Hutchison closed down 0.3% at HK$44.70 in Hong Kong.
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