Vodafone’s £16.5bn mega-merger with Three will get the inexperienced mild from the competitors regulator

Vodafone’s mega-merger with rival network Three has been given the green light by the competition regulator.

The UK’s Competition and Markets Authority (CMA) cleared the way for the £16.5billion tie-up on condition that both companies invest billions in the UK’s 5G mobile network as well as cap prices on their lowest-cost mobile plans.

The deal will create the largest mobile network in the UK, with 27m customers.

The merger was fiercely opposed by competitors EE, owned by BT, and Virgin Media O2.

Approved: Vodafone’s mega-merger with rival network Three will create the largest mobile network in the UK, with 27m customers

Vodafone will hold a 51 per cent stake in the new group. Three’s owner, Hong Kong-based conglomerate CK Hutchison, will own 49 per cent. 

FTSE 100-listed Vodafone has an option to buy out CK’s stake three years after the deal, which is now expected to be completed in the first half of next year.

Under the terms of approval, both must invest a total of £11billion over the next decade to roll out a 5G mobile network across the UK.

They must also cap the cost of some mobile tariffs and data plans for three years, and offer preset prices and contract terms to virtual network operators, such as Sky Mobile and Giffgaff, which use the infrastructure of other firms.

Stuart McIntosh, chairman of the independent inquiry group leading the investigation into the tie-up, said: ‘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.’

Vodafone boss Margherita Della Valle said the deal would create ‘a new force in the UK’s telecoms market’ and provide customers with ‘wider coverage, faster speeds and better-quality connections’. 

Vodafone shares rose 2.4 per cent or 1.66p to 71.46p.

Matthew Howett, head of Assembly Research, said that while some players, notably Sky, may try and appeal the decision through a competition tribunal, such a move would be ‘hard-fought, expensive and face a high bar’.

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