UK regulator approves £16.5bn combination of Vodafone and Three

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The UK competition regulator has approved the £16.5bn merger of Vodafone’s domestic business with CK Hutchison’s Three UK, which is expected to create Britain’s largest mobile operator.

The Competition and Markets Authority on Thursday said the deal should be allowed to proceed if both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK, as well as shorter-term customer protections.

The CMA last month paved the way for the tie-up after announcing it could proceed as long as the companies addressed competition concerns.

In September the watchdog said that the merger could lead to higher bills for tens of millions of customers and demanded changes.

The tie-up, first announced in 2023, will reduce the number of operators in the UK from four to three.

The legally binding commitments require the delivery of the joint network upgrade over the next eight years and capping selected mobile tariffs and data plans, as well as offering preset prices and contract terms for wholesale services, for three years.

Stuart McIntosh, chair of the inquiry group leading the investigation, said: “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.”

UK communications regulator Ofcom and the CMA will oversee the implementation of the commitments made by the companies to address the competition authority’s concerns. The companies have pledged to invest £11bn in the network.

In a joint statement, the companies welcomed the announcement and said the merger “creates a new force in UK mobile, unleashing more competition and investment to transform the UK telecoms landscape”.

When the deal was announced in June 2023, the companies said Vodafone would own 51 per cent of the combined business with an option to acquire CK Hutchison’s 49 per cent stake after three years if the merged group reached an enterprise value of £16.5bn.

The UK competition regulator launched a formal probe into the deal in January, and began a full-blown investigation in April.

The deal was cleared by the UK government under the National Security and Investment Act in May subject to conditions, including the establishment of a national security committee within the merged business.

This is a developing story