UK telecoms set for transformation as Vodafone and Three given green light to merge

Companies must invest in combined 5G network and offer short-term customer protections

A pedestrian passes by a Vodafone mobile store in London. The CMA has approved the Vodafone and Three merger, mandating customer protections as part of the agreement. EPA

A £15 billion ($18.9 billion) merger between Vodafone and Three UK can proceed if both companies agree to invest billions to roll out a combined 5G network, the Competition and Markets Authority (CMA) has said.

The regulator told the companies they must also offer short-term customer protections, capping certain mobile tariffs for three years.

Stuart McIntosh, chairman of the independent inquiry group leading the CMA's investigation, said the deal 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”.

Vodafone and Three's merger, valued at about £16.5 billion ($20.8 billion), will create the UK's largest mobile operator, with about 27 million customers.

The new network will reach 99 per cent of the UK population and benefit more than 50 million customers as demand for data “is set to accelerate further with more widespread adoption of new technology, such as AI”, it added. The deal is expected to complete formally during the first half of 2025.

Vodafone will own 51 per cent of the equity and after three years will have the option to buy the rest of the merged company. UAE telecommunications company e&, formerly Etisalat, currently holds a 15.010 per cent stake in Vodafone.

Vodafone chief Margherita Della Valle said the 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,” Ms Della Valle said.

“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.”

The companies “have committed to invest £11 billion to create one of Europe's most advanced 5G networks”, the pair said.

Canning Fok, deputy chairman of CK Hutchison, which owns Three UK, said the merger would make sure “customers across the country benefit from world-beating network quality”.

There are currently four mobile operators in the UK: Virgin Media-O2, EE, Vodafone and Three, which is owned by Hong Kong-based CK Hutchison. Ms Della Valle previously said a merger between her company and Three would be a “catalyst for change”.

Robert Finnegan, chief executive of Three, said the UK market was “dysfunctional and lacks quality competition”, because of the existence of two large players – EE and Virgin Media O2 – and two small players – Vodafone and Three.