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Karen Egan, telecoms expert at Enders Analysis, said the combination of Three and Vodafone could transform the fortunes of struggling operators, with Three UK on a ‘downward spiral’ as the country’s smallest player behind BT-owned EE, Virgin Media O2 and Vodafone.
Analysts at Enders suggest that the CMA is not demonstrating the ‘pro-business approach’ needed for the deal to go through. Vodafone shares fell 1.7 per cent, or 1.64p, to 94.52p.
Karen Egan, head of mobile at Enders Analysis, said: “The combination has the potential to transform the fortunes of two struggling operators, with deal upside predicated on cost synergies rather than on rising prices, which we do not foresee."
An announcement about the mooted merger of Vodafone’s UK operations with Three appears imminent, paving the way for an ultimate CK Hutchison exit.
The combination has the potential to transform the fortunes of two struggling operators, with deal upside predicated on cost synergies rather than on rising prices (which we do not foresee).
It is all to play for in regulatory clearance terms, with Ofcom expected to take a neutral stance and a seemingly open mind from DSIT, but the CMA is not yet demonstrating the more pro-business approach that was hoped for with the new regime.
“It looks like we’re at the end of the road for a generation of digital media companies,” says Joseph Teasdale at Enders Analysis.
He added “Companies like Buzzfeed and Vice were once thought to be the future of news. As long as they were growing readership and generating buzz, investors were willing to throw money at them, but the reality is they never figured out a sustainable business model.”
“The best options right now seem to be finding an audience who are willing to pay, or attracting such a valuable demographic that advertisers will spend big to reach them, but it's a struggle even then.”
The UK games sector was in favour of Microsoft's bid for US firm Activision being approved, according to the man who led the company behind Tomb Raider. Sir Ian Livingstone, also co-founder of Games Workshop, said it would be "odd" if the UK was the only place to object. The blocking of the deal by the UK regulator provoked a furious response from Microsoft, with its president saying the move was "bad for Britain".
Gareth Sutcliffe, senior games analyst at Enders Analysis, said the deal "has been in trouble for a while".
On Dana Strong: “She’s a very thoughtful and responsible businesswoman,” said Claire Enders. “When Stephen van Rooyen became chief executive in the UK and then she came in, you had a double team that were very committed to these goals of being a best practice company.”
Claire said “Mr. Sharp was a most effective chair at the most delicate time in its history and ensured its future,” She said the deal was a “miracle,” given the hostility many in the government felt toward the BBC.
Gareth Sutcliffe, senior games analyst at Enders Analysis, said Microsoft had misjudged its approach.
"The signs were clear for months that this deal was in trouble with UK regulators and yet Microsoft executives didn't prioritise it or heed the evidence that it was," he told the BBC.
Mr Sutcliffe added that Mr Smith's comments about the UK were "somewhat redundant".
"They [Microsoft] had ample opportunity to do things differently over the past 16 months - they've not provided a convincing enough case."
The CMA's decision to block Microsoft’s takeover of Activision reflects the lack of trust regulators have in Microsoft’s leadership and its future plans for game services.
The decision ultimately rewards Sony PlayStation, the market leader, which has little incentive now to transform its high-cost model, but will also stymie PlayStation's own acquisition ambitions.
Getting approval for the acquisition is difficult but not impossible. The European Commission may approve the deal in May.