Ofcom softens stance on potential Three and Vodafone merger

Regulator Ofcom has softened its stance on the potential merger between mobile operators Three and Vodafone.

A discussion paper on the body's future approach to the mobile telephone market indicated that it would base any decision on allowing the merger on the circumstances of the deal and not on maintaining a fixed number of phone operators in the UK market.

The regulator said the competition of four operators — EE, O2, Vodafone and Three — had “served the UK well”, but added in the paper that  “The question of whether a particular merger is likely to result in a substantial lessening of competition will turn on the effectiveness of competition that can be expected in the market after the merger, rather than just the number of competitors.”

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Ofcom had previously acted to maintain competition in the UK market, opposing Three from acquiring O2 from Telefónica in 2016 as “the UK would be left with just three networks”.

Newbury-headquartered Vodafone has been linked with a merger with Three, which is in the process of moving to new offices in Reading's Green Park, with consolidations with its rivals in Germany, Spain and Italy also mooted.

Vodafone's board is under pressure from activist investor Cevian to focus on its most profitable markets and make changes to its executive.

Vodafone chief executive Nick Read said earlier this month that he was keen to broaden Vodafone's footprint.

“I look at markets where I see a strong case for consolidation without the need for punitive remedies, he said.

"Those markets [are] Spain, Italy, the UK and now Portugal. Those four markets are the largest opportunity with a good and solid rationale,” he said. “We are engaged with multiple parties in multiple markets. We will remain open-minded and pragmatic to work through the opportunities at pace.”

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