Vodafone has revealed it does not generate enough cash in the UK to sufficiently invest in the market, relying on group funds to do so.
Documents released by the Competition and Markets Authority (CMA) from its BT/EE merger evidence hearings with the operator said: ‘Vodafone said that it did not generate enough cash in the UK to invest sufficiently in the future, so it was reliant on its group to fund it.’
In its CMA hearing, the network explained that this was partly because ‘UK operations had the second worst margins in the Vodafone group’
Discussing the issue of investment in greater detail, Vodafone also expressed the belief that competition was essential to encouraging companies to spend: ‘Vodafone said that with a market subject to high barriers to entry, it was important to have full and effective competition to ensure customers benefited in innovation and network investment.
‘The European Commission had stated that competition drove investment, not the other way round, so assuming the O2/Three transaction took place, it was important to have three strong, healthy competitors to drive benefits for customers in terms of speed of roll out, 4G, network investment and (in the future) 5G.
‘Vodafone was seriously concerned that unless remedies were put in place or the transaction was blocked, there could be a situation which had gone from four players in the mobile market to effectively two and a half.’
Mobile has contacted Vodafone and is awaiting a response.