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Britain’s competition regulator has approved a £16.5bn merger of Vodafone’s domestic business with CK Hutchison Three UK, which is expected to create Britain’s biggest mobile operator.
The Competition and Markets Authority said on Thursday that the deal should be allowed if both companies sign a binding commitment to invest billions in rolling out a combined 5G network across the UK and agree to a shorter customer protection.
The CMA cleared the way for the merger last month after announcing the deal could go ahead while the companies resolve competition concerns. The watchdog warned in September about the merger may result in 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.
Legally binding commitments require the joint network to be upgraded over the next eight years. The companies must also cap the prices of some mobile tariffs and data plans, and offer set prices and terms of contracts for wholesale services for three years.
Using such measures – known as behavioral remedies – instead of more drastic structural changes such as divesting parts of a business a rare degree for a regulator.
Stuart McIntosh, chairman of the inquiry team leading the inquiry, said: “We believe the merger is likely to increase competition in the UK mobile sector and should be allowed to go ahead – but only if Vodafone and Three agree to implement the measures we have proposed.”
The UK’s communications regulator Ofcom and the CMA will monitor compliance with commitments made by companies to address the competition authority’s concerns. Companies have pledged to invest £11 billion in the network.
In a joint statement, the companies welcomed the announcement and said the merger “creates a new strength in UK mobile communications, unleashing more competition and investment to transform the UK. telecommunications landscape”.
When the deal was announced in June 2023, the companies said Vodafone would own 51 percent of the combined business, with the right to buy CK Hutchison’s 49 percent stake three years from now when the combined group is worth £16.5 billion.
The UK competition regulator launched a formal investigation into the deal in January and launched a full-scale investigation in April.
The merger was cleared by the UK government under the National Security and Investment Act in May subject to conditions, including the creation of a national security committee within the combined business.
“Today’s approval releases the handbrake on the UK telecoms industry and the increased investment will put the UK at the forefront of European telecoms,” said Vodafone CEO Margarita Della Valle.
Canning Fok, deputy chairman of CK Hutchison, said the network investment plan would ensure “customers across the country benefit from the world’s best network quality”.
The CMA has previously expressed concern that “higher bills or service cuts will adversely affect customers least able to afford mobile services”. It was also previously said that the deal would have a negative impact on wholesale customers – mobile virtual network operators such as Sky Mobile and Lebara, which do not have their own networks.
Karen Egan, head of telecoms at Enders Analysis, said the CMA’s decision was “a smart way to give companies what they need to survive, while ensuring consumer protection in terms of pricing and the network quality improvements that the merger promises.” .
The merger is expected to be formally completed in the first half of 2025.
