Vodafone and Three have completed the long-awaited £15bn mega-merger to create VodafoneThree, which is now the UK’s largest mobile network operator with around 27 million customers.
The newly merged company has committed to investing £11bn over the next 10 years to build one of Europe’s most advanced 5G networks, including £1.3bn in capital expenditure during the first year.
Vodafone Group CEO Margherita Della Valle said the merger marks a pivotal moment for the UK’s digital infrastructure.
“The merger will create a new force in UK mobile, transform the country’s digital infrastructure and propel the UK to the forefront of European connectivity. We’re eager to begin building the network and delivering improved coverage and quality to customers.”
The merger concludes a two-year process that began when Vodafone and CK Hutchison — owner of Three and controlled by Hong Kong billionaire Li Ka-Shing — first proposed combining their UK operations. The deal faced regulatory scrutiny over competition concerns, particularly around reducing the number of major UK mobile operators from four to three.
It also drew criticism from unions and China-sceptic MPs concerned about national security implications, given CK Hutchison’s Hong Kong base.
However, the deal was cleared following a national security review and received final approval from the Competition and Markets Authority in December.
To secure approval, Vodafone and Three made several legally binding commitments, including the £11bn network investment and guarantees to protect certain consumer tariffs.
The merger has also been delayed due to negotiations over deal terms between Vodafone and CK Hutchison. Under the final structure, Vodafone will hold a 51% stake in VodafoneThree, with Three retaining 49%. Vodafone has the option to buy out Three’s share after three years.
Leadership of the new company will include Max Taylor, CEO of Vodafone UK, as chief executive, and Three’s Darren Purkis as chief financial officer. Executives said the merger is expected to generate £700m in annual cost savings, enabling greater reinvestment into network improvements.
VodafoneThree will carry £6bn in net debt, with both parent companies contributing a combined £800m in equity to support working capital needs.
CK Hutchison deputy chairman Canning Fok emphasised the strategic value of the deal.
“As we’ve shown elsewhere in Europe, scale enables the kind of significant investment needed to deliver world-class mobile networks. This merger not only achieves that scale in the UK, but also creates substantial value for our shareholders, including £1.3bn in net cash returned to the group.”
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