Capita-Vodafone deal could face regulatory probe

Capita's proposed takeover of Vodafone's pagers business could be referred for an in-depth phase 2 investigation by the Capital Markets Authority if the companies don't offer acceptable ways to address competition concerns.

The CMA noted that both Capita and Vodafone supply wide-area paging services to customers, including emergency services and hospitals. The competition regulator said an initial investigation into the merger found that it could lead to a substantial lessening of competition as the two companies are the only suppliers of wide-area paging services in the UK.

It added that if the merger goes through customers could face price hikes and reduced quality of coverage. Capita now has until 17 May to offer proposals to resolve competition concerns.

Customers rely on pagers because issues such as coverage, reliability and battery life mean that alternative technologies, like mobile phones, are not suitable.

At 1000 BST, Vodafone shares were flat at 205.17p while Capital was up 0.1% to 575p.