Vodafone and Three's mega-merger just the start of revolution for mobile industry: Dario Betti

FTSE 100-listed Vodafone and Three owner CK Hutchison will combine their UK operations, forming a business with about 27 million customers and more than 11,500 staff.

The merged firm will be majority owned by FTSE 100 listed Vodafone, with 51 per cent of the combined business and CK Hutchison owning the remainder.

Among other changes, the move will cut the number of major mobile network players in this country from four to three.

But the revolution in this industry is just beginning.

The operators are not just changing ownership, or in some cases brands.

The industry change is much deeper and more fundamental.

It is moving from offering ‘mobile telephony’ to ‘mobile data’.

Changes in the cost structures, the sales channels, the employee mix, and the technology itself are proving particularly challenging for some of the telcos.

The mobile operators still have a very important role to play, but they will also have to fund large network modernisation plans to keep up with data traffic.

Stagnant revenues and increasing interest rates are putting proper 5G rollouts in questions, as well as some serious doubts about 6G.

Consumers should not worry too much about their choice of operators and tariffs.

Competition is likely to remain high, with secondary discount brands and virtual mobile operators providing a variety of options.

The competition authority will likely make remedies to ensure that the re-seller market is going to be protected with some special deals.

As a result of this merger, we will have a more rationalised set of masts and radio networks, but the consumer offer will remain rich.

The merger of Vodafone UK and Three is only the latest chapter in the industry consolidation.

Notably T-Mobile and Orange created EE, and then Virgin and O2 have been some of the biggest recent announcements.

Other big mergers have been blocked in the past, especially by EU regulators, such as the Three O2 deal in 2016.

However, most regulators seem to have shifted their position.

The existing size of operators in Europe puts them at a disadvantage with American or Asian players.

The latter often count on hundreds of millions of consumers and larger economies of scale.

To maintain a role in the development of the future digital infrastructure the industry needs larger champions with bigger R&D and investment plans.

This is not likely to be the last of merger from either the Three or the Vodafone group globally.

Dario Betti is CEO of MEF (Mobile Ecosystem Forum) a global trade body established in 2000 and headquartered in the UK with members across the world.