The £15 billion merger of mobile operators Vodafone and Three in the UK has been given the green light by the competition authorities after an 18 month investigation.
The Competition and Mergers Authority (CMA) said the deal can go ahead if “both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK.”
The merger will reduce the number of mobile infrastructure operators from four to three and is expected to formally complete during the first half of 2025. Vodafone will own 51% of the equity and three years after completion will have an option to buy up Hutchison’s 49% stake. However, the branding of the new business has not yet been decided.
The merger business will be the biggest player in the UK in the mobile sector and will have 20% of the overall UK telecoms market.
Vodafone CEO Margherita Della Valle said she expected UK consumers will start noticing improvements in reliability and coverage within months of the merger being concluded.
She said: We are happy. If you look in the eyes of our network engineers today you will see theri exxciteent. The are now going to do what we do best, deliver the best possible service to our customers.”
She added: “Today’s decision creates a new force in the UK’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves. Consumers and businesses will enjoy wider coverage, faster speeds and better-quality connections across the UK, as we build the biggest and best network in our home market. Today’s approval releases the handbrake on the UK’s telecoms industry, and the increased investment will power the UK to the forefront of European telecommunications.”
Canning Fok, deputy chairman of Three’s owner CK Hutchison said: “We have been operating telecoms businesses in the UK for over three decades and Three UK for the past two.
“We have invested in the people and the infrastructure, helping to bring the benefits of mobile connectivity to UK businesses and consumers. When Three and Vodafone are combined, CK Hutchison will fully support the merged business in implementing its network investment plan, the cornerstone of today’s approval by the CMA, transforming the UK’s digital infrastructure and ensuring customers across the country benefit from world-beating network quality.”
Vodafone and Three have committed to invest £11 billion to create what they describe as “one of Europe’s most advanced 5G networks.”
As well as the investment commitment the CMA secured pledges that the merged company will cap some mobile tariffs and offer preset contractual terms to virtual network operators for three years.
Stuart McIntosh, chair of the independent inquiry group leading the investigation, said: It’s crucial this merger doesn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market.
“Having carefully considered the evidence, as well as the extensive feedback we have received, we believe the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed – but only if Vodafone and Three agree to implement our proposed measures.”
Analyst Paolo Pescatore, founder of PP Foresight, said: “The CMA has done a thorough job of highly scrutinising this deal, it’s now up to both parties to deliver on their promises. That should mean wins for UK plc – bringing much needed investment in the network – and for consumers in the form of better services. Let’s not forget that VMO2 is one the beneficiaries as it will get some of the excess spectrum from the combined merged entity.”
“A decision may have been made today but it’s still a waiting game. The bottom line is it will take many years before the full merits of the deal are realised, and there’s a lot of tough decisions to come. Merging two networks is no easy feat. While there are past examples with BT/EE and VMO2 to draw upon, it’s not going to be smooth sailing.”
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