A mega-merger between Vodafone and Three is at risk of falling apart after the competition watchdog launched an in-depth investigation into the deal.
The Competition and Markets Authority (CMA) will probe the £15billion tie-up over concerns it will push up prices for customers.
The decision pits Vodafone boss Margherita Della Valle against the CMA’s managing director Sarah Cardell.
Last week, the regulator said the merger would reduce rivalry in the sector. The companies were given five days to respond to the findings of the first stage of the investigation. But they did not offer solutions, which has triggered the second phase of the probe.
The CMA has the power to block mergers that would harm customers.
Probe: The regulator’s decision over the £15bn tie-up pits Vodafone boss Margherita Della Valle, left, against the CMA managing director Sarah Cardell, right
Three and Vodafone yesterday said the phase two investigation was ‘an expected next step in the process’. But Karen Egan, head of telecoms at Enders Analysis, said there was ‘a considerable risk’ the deal will be blocked.
Della Valle became Vodafone’s first female chief executive early last year. She took over after Nick Read, who presided over a big slump in the FTSE 100 firm’s share price, was ousted in 2022.
The Italian businesswoman, who has worked for Vodafone for nearly 30 years, was tasked with turning the telecoms giant’s fortunes around.
Under the plan, the proposed tie-up would bring together 28m customers under a single provider, creating the biggest UK mobile phone network.
But the CMA warned last week the merger may reduce networks’ rivalry to win customers, removing price competition and the incentive to improve services.
In a joint statement, Vodafone UK and Three UK said: ‘This was an expected next step in the process and is in line with the timeframe for completion.’
Last week Julie Bon, CMA deputy chief economic advisor, said: ‘Whilst Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims.
‘Our initial assessment of this deal has identified concerns which could lead to higher prices for customers.
‘These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions.’
The companies have insisted a deal will benefit customers as it will allow them to invest £11billion in technology. They said they are unable to compete with market leaders EE and O2.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘The outcome from this won’t be known until mid-September, and there will be little to move Vodafone’s share price between now and then as this is the main sentiment driver.’
Vodafone shares fell 1.5 per cent.