Vodafone UK merger with Three UK will 'accelerate growth & investments' - Vodafone UK CEO

I'm the CEO for Vodafone UK, as you know, so I'm not here to speak on behalf of Vodafone group. However, the proposed deal would be 51 Vodafone group and 49 on the Three side. So it's clearly a deal that creates a lot of value for both shareholders.

I think the focus should really be on what this deal brings to the UK market and brings value to both shareholders. Clearly it's 51 Vodafone group, so there is control and management coming from this side, but it creates value for both shareholders.

We believe it's a very good opportunity for the UK in general. We believe the deal is very good for customers in the UK because it creates a much better network, a much bigger network, a more reliable network that will be available from day one for UK consumers. Both Vodafone and Three consumers will benefit from a wider, bigger network.

So today we have a kind of inefficient model in terms of deploying our investment. We're all building maybe in the key areas. With bringing this together, it will become more efficient investment where we can focus more on covering the length and breadth of the UK rather than only focusing on the key spots. So it becomes a much more efficient investment. The opportunity for customers to get faster network — everybody wants more data. Data has grown over the past five years by 400 percent and it will continue to rise by 40 every year. So the need for higher speeds, 5G, cannot be more than what we have today, and this accelerates the opportunity for this. It also accelerates investment. The proposed plan is about investing 11 billion over the next 10 years. This amount of investment will not only build a world-class 5G standalone network but will also accelerate investment in the UK, accelerate employment in the UK. And then maybe last but not least, from a competition perspective, we believe in a market that's competitive. And to deliver on this, we need the third and fourth players to come together to properly challenge the two leading players in the market, and we get more of a competitive environment with more choice for consumers and businesses.

I think it's been well recognized, and we've been quite honest and straightforward with it. I think the rate of return in our industry today is a challenge. The third and fourth players, we're not making returns that would go above our cost of capital. Three has been cash flow negative for the past three years. So it's not a sustainable position for us to really accelerate investment going forward. The case that we're bringing together with this proposed merger would clearly make investment more efficient as we deploy where it's needed. So I think the focus should be on how we bring the investment to deliver the best service for consumers, the best service for businesses, and deliver on the government's wireless infrastructure strategy of covering more than 99 percent of the UK with 5G standalone, which has huge economic value not only for consumers but also for businesses.

So it's very early today to talk about job losses, but clearly this case is about investment, and with investment there will be a direct and indirect benefit for employment. Clearly we might, provided we get clearance on the deal and we get to merge companies, we might have some roles that might be impacted, and this would go through proper consultation and proper process. But also there is a lot of room for reskilling, there is a lot of room to reinvest in the network and deploy resources where it can add value.

In my opinion, we take security procedures very seriously. As a business that's regulated and managed by the telecom security regulation in the UK, and also we respect customer privacy. We take this very seriously. I can tell you that within our business, only customer-vetted teams would have access to secure details. So in some cases, not even myself or my group CEO would have access to such information. Both businesses today are operating in the UK, both businesses are subject to the same regulation. We will need to go through the National Security process as we go through it, but we're quite confident that we have a strong case and we have strong compliance when it comes to security.

So I cannot speak on behalf of the CMA on this front, but I have to say we need to look to the market in a realistic way. What this deal is proposing and what it's bringing is really a third big challenger to add to the competition of the two big companies in the market. So it's really, we need to see it as not four to three, it's actually two to three. But then we also need to remember that around one in four customers in the UK are buying mobile connectivity from operators and providers who don't own their own network. So you have the likes of some of our competitors within the mobile virtual space, and one in four customers would go there. So the market is quite competitive today and will remain competitive. What this deal brings is it actually elevates the quality of the network, it brings a third strong challenger in the market for even our possible partners within providers who do not own their network to have access to another third competitive network.