UK watchdog CMA approves £16.5bn tie-up of Vodafone and Three

The £16.5 billion merger of telecoms giants - Newbury-based Vodafone and Three - has been approved by watchdog, the Competition and Markets Authority (CMA).

It comes after 18 months of analysis by the regulator, with the tie-up poised to create the UK's biggest mobile network with 27 million customers.

READ MORE: Vodafone and Three disagree with regulator's provisional merger findings

The watchdog had previously concluded that the mega deal could lead to price increases for tens of millions of mobile customers or see them get a reduced service.

It had also provisionally found that it would negatively impact ‘wholesale’ telecoms customers - Mobile Virtual Network Operators (MVNOs) such as Lyca Mobile, Sky Mobile and Lebara - which rely on the existing network operators to provide their own mobile services.

But now the merger can go ahead, said the CMA, as long as both companies agree to invest billions to roll out a combined 5G network across the UK.

In its final decision, published today, the CMA said it was now satisfied that the proposed network commitment, supported by shorter term protections for both retail and wholesale customers, had "resolved its competition concerns".

Stuart McIntosh, chair of the independent inquiry group leading the investigation, said: "It’s crucial this merger doesn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market.

"Having carefully considered the evidence, as well as the extensive feedback we have received, 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.

"Both Ofcom and the CMA would oversee the implementation of these legally binding commitments, which would help enhance the UK’s 5G capability whilst preserving effective competition in the sector."

In a stock market statement, Vodafone chief executive Margherita Della Valle, added: "Today's 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.

"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."

Meanwhile, Canning Fok, deputy chairman of CK Hutchison and chairman of CK Hutchison Group Telecom Holdings, which owns Three, said: "We have been operating telecoms businesses in the UK for over three decades and Three UK for the past two.

"We have invested in the people and the infrastructure, helping to bring the benefits of mobile connectivity to UK businesses and consumers.

"When Three and Vodafone are combined, CK Hutchison will fully support the merged business in implementing its network investment plan, the cornerstone of today's approval by the CMA, transforming the UK's digital infrastructure and ensuring customers across the country benefit from world-beating network quality."

The merger is expected to formally complete during the first half of 2025.

Vodafone will own 51% of the equity and, after three years following completion and subject to certain conditions, it may acquire Hutchison's 49% stake via a put and call option.