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The UK Competition and Markets Authority (CMA) has approved the merger of Vodafone (LSE:VOD) and Three UK, ending months of regulatory scrutiny. The new organization will be the country’s largest mobile operator with more than 27 million customers.
The £16.5bn deal will bring together two of the UK’s four major mobile network providers and is expected to complete in the first half of 2025.
The two companies first announced their intention to merge in June 2023.
Three UK is a subsidiary of Hong Kong-based conglomerate CK Hutchison Holdings (HKG: 0001).
conditions
The CMA’s approval is dependent on legally binding commitments from Vodafone and Three.
- Investing £11bn in 5G upgrades: The combined company will need to roll out a national 5G network over the next eight years, with the aim of improving coverage and quality.
- Mobile price caps: To protect customers from price increases during network rollout, selected data plans and rates will have three-year caps.
- Fair access for virtual carriers: Mobile virtual network operators (MVNOs) such as Sky Mobile and iD Mobile have pre-set wholesale pricing and a three-year warranty to ensure competitive pricing. conditions are provided.
The CMA and Ofcom (short for the UK’s communications regulator, the Office of Communications) will oversee compliance, and the combined entity will be required to publish an annual progress report.
what it means
Stuart McIntosh, chair of the CMA research group, said: “This merger is likely to increase competition in the UK mobile sector…but only if Vodafone and Three implement the proposed measures.” said.
Margherita Della Valle, CEO of Vodafone, praised the partnership, saying, “The handbrake has been lifted for the UK telecommunications industry,” and Canning Fok, vice chairman of CK Hutchison (owner of Three), said: He highlighted the potential for transformation of the UK’s digital infrastructure.
Vodafone will hold a 51% stake in the combined company and CK Hutchison will hold 49%. Vodafone could take full ownership in three years.
Analysts say the merger is in line with the trend of market consolidation following deals such as BT’s acquisition of EE in 2016 and Virgin Media’s merger with O2 in 2021.
The deal promises big investments in infrastructure, but critics remain cautious, warning of potential job losses and long-term price increases after initial protections expire.
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