The UK’s Competition and Markets Authority (CMA) has approved the merger of Vodafone (LSE: VOD) and Three UK, ending months of regulatory scrutiny. The new entity will be the largest mobile operator in the country, with more than 27 million customers.
The £16.5 billion deal consolidates two of the UK’s four main mobile network providers and is expected to be completed in the first half of 2025.
The companies first announced plans to merge in June 2023.
Three UK is a subsidiary of CK Hutchison Holdings (HKG: 0001), a conglomerate based in Hong Kong.
Terms
The CMA’s approval is contingent on legally binding commitments from Vodafone and Three:
- Investing £11bn in 5G upgrades: The combined company is to roll out a nationwide 5G network over the next eight years, aiming to improve coverage and quality.
- Capping mobile prices: Certain data plans and prices will be capped for three years to protect customers from price increases as the network rolls out.
- Fair access for virtual operators: Mobile virtual network operators (MVNOs), such as Sky Mobile and iD Mobile, will be offered predefined wholesale prices and terms for three years to ensure competitive prices.
The CMA and Ofcom (short for the UK’s communications regulator) will oversee compliance, with the merged entity required to publish annual progress reports.
Consequences
Stuart McIntosh, chair of the CMA inquiry group, said: “This merger is likely to boost competition in the UK mobile sector… but only if Vodafone and Three implement the proposed measures. »
Vodafone CEO Margherita Della Valle hailed the deal as “a handbrake for the UK telecoms industry”, while Canning Fok, vice-chairman of CK Hutchison (owner of Three), highlighted the potential transformation of the UK’s digital infrastructure.
Vodafone will hold a 51% stake in the combined company, with CK Hutchison retaining 49%. Vodafone will be able to acquire full ownership after three years.
Analysts have highlighted that the merger aligns with market consolidation trends, following deals such as BT’s acquisition of EE in 2016 and the Virgin Media-O2 merger in 2021.
Even though the deal promises substantial investment in infrastructure, critics remain cautious, warning of possible job losses and longer-term price hikes after initial protections expire.
