The regulator says a merger between Vodafone and Three could happen – if both companies make price promises to consumers and commit to boosting the UK's 5G rollout.
The Competition and Markets Authority (CMA) previously said the creation of what would be the country's largest mobile network could drive up prices and harm competition.
But it has now tentatively concluded that those concerns could be resolved – and the merger could go ahead – if the companies agreed to the proposed solutions.
A Vodafone spokesperson said both companies would need to study the CMA's proposal more closely, but judged, based on initial impressions, that it “paves the way for final authorisation”.
They insisted, as they always have, that the deal was in everyone's interest.
“This will bring significant benefits to businesses and consumers across the UK, and bring advanced 5G to every school and hospital across the country,” they said.
The CMA's findings are the final stage of its investigation into the merger, which began in January.
Vodafone and Three announced plans to merge their UK-based operations in June last year.
Their combined network would have around 27 million customers.
“We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed,” said Stuart McIntosh, who heads the CMA panel investigating the merger.
“We expect that over the longer term, the significant commitment to network modernization from the combined companies over the next ten years or so will ultimately create a competitive environment that will maintain the competition we have seen in the mobile sector in recent years ” he told Today. programme, on BBC Radio Four.
But he also made clear that short-term commitments not to increase the price of some existing mobile tariffs and data plans for at least three years were also essential to ensure consumers did not lose out.
The regulator also said that respecting agreements or prices previously agreed with mobile virtual network operators such as Sky Mobile, Lyca and Lebara could protect both consumers and wholesale customers.
Industry analyst Paolo Pescatore told the BBC it was “another key step towards approval” and showed everyone involved was trying to find a way to make the deal happen.
The two biggest players in the market are currently EE and 02. Mr Pescatore said a merger of Vodafone and Three would be in a better position to take on them.
“To date, both parties are demonstrating that this is genuinely in the interests of the UK, the economy and users, paving the way for a much stronger three-player market than the current imbalance,” he declared.
The CMA expects responses to the proposed remedies by November 12, with a deadline of December 7 for a final decision on the merger.
