The £16.5bn merger will create a telecom giant with enhanced 5G capabilities, following the competition and markets authority’s approval.

Vodafone and Three have received official approval from the Competition and Markets Authority (CMA) to merge, creating the UK’s largest mobile network, serving over 27 million customers. The £16.5 billion deal has been granted with conditions that ensure a significant upgrade to the country’s 5G infrastructure and offer protections against short-term price hikes for customers.

The merger of the third and fourth largest mobile operators, Vodafone and Three, faced strong opposition from rivals such as BT, who were concerned about the impact on competition and customer bills. However, after extensive scrutiny, the CMA has greenlit the deal, subject to Vodafone and Three committing to substantial investments in network improvements.

The new company will invest £11 billion into upgrading the combined network, enhancing 5G coverage across the UK. In return, the CMA believes the merger will foster long-term competition, despite the potential for short-term price increases. This merger is expected to be finalised in the first half of 2025.

Margherita Della Valle, CEO of Vodafone, welcomed the decision, stating that the deal would “release the handbrake on the UK’s telecoms industry” and bring much-needed investment into the market. She assured customers that the deal would be “self-funded,” with no additional costs to the public or customers, emphasising that the merger was designed to improve the country’s telecom infrastructure without burdening users financially.

As part of the deal, the merged entity will retain current mobile tariffs and data plans for at least three years, including those on sub-brands. Additionally, the CMA has stipulated that Vodafone and Three must ensure competitive wholesale deals for mobile virtual network operators (MVNOs), such as Sky Mobile and Lebara, to maintain fair competition.

The merger, first announced in 2023, sees Vodafone taking a controlling 51% stake in the combined company, with the option to buy out Hutchison’s 49% share after three years. The deal’s approval marks a significant shift in the UK telecom landscape, creating a powerhouse capable of driving advancements in 5G technology and offering better coverage and speeds for consumers across the country.

Stuart McIntosh, Chair of the CMA’s independent inquiry group, explained that the merger’s approval was contingent on maintaining competition within the telecom sector. The watchdog’s careful review concluded that the deal would boost competition in the long term, provided Vodafone and Three adhered to the necessary investment commitments.

Industry analyst Karen Egan from Enders Analysis supported the decision, arguing that the merger would ultimately benefit consumers and businesses. She noted that the UK would see higher-quality networks, moving away from the previous cycle of low investment and returns that had stunted growth in the sector.

Canning Fok, Deputy Chair of CK Hutchison, which owns Three, expressed confidence in the merger, promising that the company would support the network investment plan, which he called “the cornerstone” of the CMA’s approval. He reiterated that this would transform the UK’s digital infrastructure and improve service quality for all customers.

The deal marks a new era for the UK telecom industry, with the potential for a more robust and competitive market driven by increased investment in 5G technologies. While there are concerns over potential price increases in the short term, the long-term prospects for improved coverage and speeds could benefit millions of mobile users across the country.