VV Shots/iStock Editorial via Getty Images
Vodafone (NASDAQ:VOD) said Virgin Media O2 will acquire some spectrum from the entity formed following the merger of the U.K. telecommunication businesses of Vodafone and CK Hutchison’s (OTCPK:CKHUY) (OTCPK:CKHUF) Three UK.
The network sharing agreement is subject to approval of the merger by The U.K.’s Competition and Markets Authority, or CMA, which has already launched an in-depth probe against the combination.
In March, the CMA said that it was worried that the merger of U.K. telecommunication businesses of the two companies could lead to mobile customers facing higher prices and reduced quality.
Vodafone and VM02 noted that the agreement and the merger will rebalance the mobile market by creating a third scaled network operator.
The transaction will also extend benefits from the merged company’s committed £11B network investment plan to Virgin Media O2’s customers and to the mobile virtual network operators, or MVNO, with whom they have wholesale partnerships.
The companies added that the agreement and merger will enhance competition in the retail and wholesale mobile markets.
Vodafone UK and Virgin Media O2 agreed to extend their existing mobile network sharing agreement for more than a decade. Many elements of the agreement expand on the existing arrangement between Vodafone UK and Virgin Media O2 and are independent of the merger.
However, the operators have agreed that Virgin Media O2 will acquire spectrum from the merged company, thereby setting up three scaled mobile network operators each with better spread of spectrum holding, the companies noted.
“The proposed merger, together with this agreement, will boost competition by establishing a strong third player in the UK mobile market and will improve the balance of spectrum holdings, levelling the playing field between the UK’s mobile operators,” said Ahmed Essam, CEO, European Markets, Vodafone.
Through a combination of the merged company’s pledge to invest £11B in its network over the next decade and Virgin Media O2’s £2B annual investment in its networks and services, the agreement will ensure quality mobile connectivity, choice and competition is enhanced, according to the companies.