Merged Vodafone/Three could offer UK’s leading mobile coverage

Just days after the Competition and Markets Authority (CMA) concluded that the merger of UK mobile operators Vodafone and Three could lead to higher prices for customers and affect investment in UK mobile networks, research from independent mobile-network experience analytics firm Opensignal has calculated that the merger could actually create a new challenger for the UK’s best network coverage, particularly with substantially improved 5G coverage. 

The potential merger – which would bring 27 million UK customers under a single provider – was announced in June 2023, and saw the operators’ parents, Vodafone Group and CK Hutchison Group Telecom (CKHGT), enter into binding agreements to combine their UK telecoms assets, introducing, said Vodafone UK and Three UK, a much-needed alternative and increased competition in the UK comms market.

The CMA launched its initial investigation into the merger in January 2023, comprising a 40 working day review designed to identify whether the deal could lead to a “substantial lessening of competition”, focusing on the potential impact on consumers and businesses in the UK.

The Phase 1 CMA investigation revealed concerns that combining the two businesses could reduce rivalry between mobile operators to win new customers and that the deal might make it difficult for smaller mobile virtual network operators, such as Sky Mobile, Lebara and Lyca Mobile, to negotiate good deals for their customers by reducing the number of mobile network operators capable of hosting them.

Yet the CMA assessment also observed that when announcing the deal in 2023, Vodafone UK and Three UK claimed that combining the businesses would result in significant benefits to customers and expedite the deployment of new technologies.

In its analysis, Opensignal took data from current users on the two networks to offer insights into the potential projected future mobile coverage of the combined operator following a merger. It assumed that all current sites would keep running where they are, serving their unique coverage area.

The analyst said the results of its user experiences analysis suggested the merger would allow users on the combined network to enjoy a coverage experience that rivals that of O2, the current market leader according to its data.

After overlaying the network coverage on top of one another, Opensignal said it could identify two sets of areas – one where both networks already have coverage, and another that is not currently covered by one of the networks but would gain coverage following a merger.

The data showed what was described as a substantial number of areas where improvements are expected – particularly in less densely populated areas. To arrive at a coverage experience score, Opensignal calculated the area where users on a given operator have seen service of any generation (2G to 5G) as a share of the total populated regions within the country where users have taken readings.

As a result, Three UK customers were found to be likely to see the greatest uplift in coverage experience, set to rise for the combined entity to 8.8 on a 10-point scale, from the operator’s current score of 7.6. For Vodafone, the score could rise from 8.2 points. With O2 on par with a merged company, EE would be placed behind the two new market leaders, with its coverage experience score of 8.5.

Interestingly, given the perceived lack of activity of mobile operators in such areas, Opensignal said the expanded coverage would be felt most by those in the countryside, where the reach is more limited than in more densely populated areas, particularly within and around cities.

Opensignal also predicts a considerably better 5G coverage experience for current Three UK and Vodafone users as a result of the merger. Similar to the impact on overall network coverage, Opensignal believes the benefits of 5G coverage post-merger would be seen particularly in rural areas, but the projected synergy would be far greater. The analyst stressed that while 5G coverage in rural areas generally lags behind that in urban locations, Vodafone’s rural 5G presence has been particularly sparse compared with its competition in the UK.

Opensignal’s calculated projection indicates that Vodafone customers can expect their post-merger 5G coverage experience to dramatically increase, with the metric score more than doubling compared with that seen currently. The 5G coverage experience score of the combined network would be 3.6 out of 10, meaning that current Vodafone users’ score would rise by 106% from the current score of 1.8.

Three UK’s network has much wider geographical 5G coverage and is set to see a synergy of 9% from the current score of 3.3 points. EE will still retain its leadership, according to Opensignal analysis, with its score of 3.8 points projected to remain.

In its analysis, Opensignal noted that the merger would likely lead to the decommissioning of overlapping sites to optimise the combined network. It should be noted that such actions could have both positive and negative effects on network performance, depending on how they’re managed.