The UK's Competition and Markets Authority (CMA) has today (November 5) stated that Vodafone and Three's merger could go ahead.

The UK watchdog revealed that its in-depth probe into the £15 billion ($19.48bn) deal could address some of the provisional competition concerns it had.

It comes only a couple of months after the CMA said it found competition concerns ahead of the planned merger, which was first announced more than two years ago.

The CMA launched its Phase 2 investigation into the merger, which is poised to create the UK's biggest mobile network operator, back in April, before extending the deadline for a decision until December 7.

However, the CMA has today said its investigation has found cause for optimism, as it published its Remedies Working Paper, aimed at addressing its initial concerns.

In September, the CMA outlined fears that the deal would hurt mobile virtual network operators, such as Sky Mobile, Lyca, Lebara, and iD Mobile, while also leading to higher price hikes for customers.

But, a commitment put forward by Vodafone and Three to invest £11bn ($14.29bn) to upgrade the merged company’s network across the UK, including the roll-out of 5G, has softened the CMA's stance on the deal.

"We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed," said Stuart McIntosh, chair of the inquiry group leading the investigation.

"Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger."

Multi-billion pound network investment

According to the CMA, the plans put forward by the two telcos to invest billions would significantly boost competition between mobile network operators in the long term, to the benefit of millions across the country.

Other remedies put forward by the CMA to Vodafone and Three include a commitment to retain certain existing mobile tariffs and data plans for at least three years, plus a commitment to pre-agreed prices and contract terms to ensure that MVNOs can obtain competitive wholesale deals.

"An appropriate balance appears to have been struck by ensuring that the significant benefits of the merged company’s investments can be realized in full and at pace to the benefit of the country and its citizens, while addressing the CMA’s stated concerns," said Vodafone and Three in a joint statement.

"However, it is essential that balance is preserved through to the end of the process, reflecting that the Parties have offered extensive remedies, including by making their future network roll-out fully enforceable. The merger will be a catalyst for positive change. It will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country."

The merger will give Vodafone a 51 percent majority stake in the combined entity, currently labeled as "MergeCo," with CK Hutchison's Three holding the remaining 49 percent.

Both telcos have previously said they welcome a more in-depth probe into the proposed union. The former UK government approved the merger in May.

Rival telco BT, which owns EE, has its own concerns about the deal, saying it would "create a merged entity with a disproportionate share of capacity and spectrum," which it notes is unprecedented in the UK and Western European mobile markets, while Unite the union has issued its own objections.

Positive outlook

The statement put out today has been labeled as a positive one for the two telcos, according to Kester Mann, director, consumer and connectivity, CCS Insight.

"Vodafone and Three can tentatively order in the champagne as their blockbuster UK joint venture appeared to take another big step forward following a positive statement from the competition watchdog this morning," he said.

If approved, the deal would create the UK's largest network operator, with around 29 million customers.

A final decision on the merger will be revealed on December 7, while the CMA said that it wants feedback on today’s announcement by 5pm on November 12.