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Highlights
- Vodafone (VOD) and Three UK merge to create the largest mobile network in the UK.
- CMA grants approval with conditions on 5G investment and customer protections.
- The merger is set for completion in the first half of 2025.
Vodafone and Three UK, a subsidiary of CK Hutchison Holdings (HKG:0001), have received approval from the UK Competition and Markets Authority (CMA) to merge, forming the largest mobile operator in the country. The deal, valued at £16.5 billion, concludes months of regulatory scrutiny and positions the new entity as a major player in the UK telecom sector with over 27 million customers.
The merger consolidates two of the UK’s four primary mobile providers, a significant step towards reshaping the telecommunications landscape. Announced initially in June 2023, the deal is expected to finalize in the first half of 2025, subject to compliance with a series of regulatory commitments.
Key Commitments
The CMA approval hinges on specific legally binding measures to ensure fair competition and consumer benefits. Vodafone and Three have agreed to invest £11 billion in nationwide 5G network upgrades over the next eight years, significantly improving network quality and coverage. This substantial commitment aligns with the companies’ vision for a robust digital infrastructure.
Additionally, mobile tariffs will be capped on select data plans for three years to protect customers from potential price increases during the 5G rollout. Fair access will also be maintained for Mobile Virtual Network Operators (MVNOs), such as Sky Mobile and iD Mobile, through pre-set wholesale prices and terms over the same period. These measures aim to keep pricing competitive while fostering market stability.
Compliance with these conditions will be monitored closely by the CMA and Ofcom, with annual progress reports required from the merged entity.
Strategic Implications
The merger aligns with broader trends in market consolidation, similar to past deals such as BT’s acquisition of EE and the Virgin Media-O2 partnership. Vodafone will hold a 51% stake in the new company, while CK Hutchison will retain 49%. After three years, Vodafone has the option to acquire full ownership.
This collaboration is seen as a transformative step for the UK telecom sector. Stuart McIntosh, chair of the CMA inquiry group, emphasized the potential for enhanced competition if commitments are fulfilled. While the deal promises significant investment and modernization, concerns over job losses and long-term price hikes have been raised by critics.
With its approval, the merger positions Vodafone and Three as leaders in advancing UK digital infrastructure and driving technological innovation.
