On June 14, 2023, Vodafone U.K. and 3 U.K. announced their intention to merge into a single entity. In the public announcement, the companies said the merger will bring immediate improvements in network coverage and reliability when the two networks come together, without any additional costs to their customers. Longer-term, the merger is also intended to create one of Europe's leading 5G networks.
In this analysis, Opensignal leverages data from our users on the two networks today, to offer insights into the potential projected future mobile coverage of the combined operator post-merger. This analysis provides a network-level assessment and does not provide commentary on competition implications or any potential outcomes from increased network economics or related regulatory remedies. The results of our analysis of user experiences with Vodafone and 3 in the U.K. suggests the merger will allow users on the combined network to enjoy Coverage Experience that rivals that of O2, the current market leader according to Opensignal data.
Vodafone and 3’s customer bases stand at 18.6 million and 9.4 million mobile connections in Q4 2023 respectively, which if combined together would bring their market share to 32% in the UK market, according to the latest data available from GSMA Intelligence. This merger has the potential to impact one in every three mobile customers in the country, significantly influencing the market's overall connectivity level. However, as of 22 March 2024 the merger is still pending regulatory approvals and potentially facing a more in-depth Phase 2 investigation.
New challenger for UK’s best network coverage
In this analysis Opensignal looks to understand and compare the extent of coverage of the two networks today. After overlaying the network coverage on top of one another we can identify two sets of areas - one set where both networks already have coverage (‘Areas of existing overlap’) and another set which is not currently covered by one of the networks, but will gain coverage post-merger (‘Areas either operator will gain coverage’). There is a substantial number of areas where we expect improvements to take place - particularly in less densely populated areas. In this analysis, we've assumed that all current sites will keep running where they are serving their unique coverage area.
In our analysis we further quantify the data collected by our users relating to their network coverage pre- and post-merger by using our Coverage Experience metric. The metric assesses the real-world network coverage users experience by measuring the extent of operators’ networks across populated areas. To arrive at Coverage Experience score we calculated the area where Opensignal 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 our users have taken readings. 3 customers will see the greatest uplift in Coverage Experience – according to our analysis Coverage Experience is set to rise for the combined entity to 8.8 on a 10-point scale, from 3’s current score of 7.6 (a 16% increase). For Vodafone the score will rise from 8.2 points (an increase of 8%). The expanded coverage will be felt most by those in the countryside, where the reach is much more limited compared to the more densely populated areas particularly within and around cities.
The chart illustrates that the combined network of Vodafone and 3, post-merger, will offer a Coverage Experience on par with O2, the current metric leader. Users of the newly merged network can expect market leading coverage, achieving a joint-leading score of 8.8 out of 10. EE will be placed behind the two new market leaders, with its Coverage Experience score of 8.5.
Substantially improved 5G coverage
Opensignal also predicts a considerably better 5G Coverage Experience for the current 3 and Vodafone users as the result of the merger. Similar to the impact on overall network coverage, the benefits on 5G coverage post-merger will be seen particularly in rural areas, but the projected synergy will be far greater. Opensignal has previously explored the proportion of time our 5G users spend with an active 5G connection across rural and urban areas in the UK, and found that users in rural areas were lagging behind in time spent with access to the latest generation network. While 5G coverage in rural areas generally lags behind that in urban locations, Vodafone's 5G rural presence has been particularly sparse compared to its competition in the U.K.
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 to that seen pre-merger. 5G Coverage Experience metric works in the same way as the overall Coverage Experience metric – but looks only at where users connect to 5G. The 5G Coverage Experience score of the combined network will be 3.6 out of 10, meaning that current Vodafone users’ score will rise by 106% from the current score of 1.8 on a 10-point scale. According to the experience of our users, 3’s network has much wider geographical 5G coverage and will see a synergy of 9% from the current score of 3.3 points. EE will still retain its leadership, as its score of 3.8 points is projected to remain unsurpassed after the merger.
EE's grip on Opensignal's award table is set to weaken
EE has consistently outperformed its rivals in terms of Opensignal awards since 2016, when Opensignal started publishing mobile network experience reports in the UK market – giving out public awards for recognized leading user experience.
If the two merging operators were treated as a single entity in the latest United Kingdom: Mobile Network Experience September 2023 report, they would have taken home eight awards (some awards were already jointly won) and closely trail EE’s 10 awards for that period. This does not account for further benefits that will potentially be realized as the result of merger synergies, the assessment of which Opensignal leaves for future market reports.
The merger between Vodafone and 3 will likely lead to the decommissioning of overlapping sites, in an effort to optimize 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. Opensignal is committed to continuously monitoring the U.K. market, and will be aiming to provide detailed insights into the impact on the quality of user experience once the merger is complete and the network assets are fully integrated.
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