Vodafone and CK Hutchison, owners of Three, have struck a deal to merge their UK mobile operations.
The two companies say the tie-up would mean customers “enjoy a better network experience with greater coverage and reliability at no extra cost.”
They also promise to invest £11 billion over ten years “to create one of Europe’s most advanced standalone 5G networks” and say they would be able to deploy a “best-in-class” 5G network sooner than as standalone businesses.
Under the deal, Vodafone will own 51% of the combined business with CK Hutchison holding the remaining 49%.
The combined entity will have a six-person board, comprising three directors appointed by Vodafone and three directors appointed by CK Hutchison. Current Vodafone UK CEO Ahmed Essam will become CEO of the merged business while Three UK CFO Darren Purkis will take the hold the same post in the new business.
The deal is expected to complete before the end of 2024, subject to regulatory and shareholder approvals.
Margherita Della Valle, Vodafone Group Chief Executive, said: “The merger is great for customers, great for the country and great for competition. It’s transformative as it will create a best-in-class – indeed best in Europe – 5G network, offering customers a superior experience.
“As a country, the UK will benefit from the creation of a sustainable, strongly competitive third scaled operator – with a clear £11 billion network investment plan – driving growth, employment and innovation.
“For Vodafone, this transaction is a game changer in our home market. This is a vote of confidence in the UK and its ambitions to be a centre for future technology.”
Canning Fok, Group Co-Managing Director of CK Hutchison, said: “Today’s announcement is a major milestone for CK Hutchison and for the UK.
“Three UK and Vodafone UK currently lack the necessary scale on their own to earn their cost of capital. This has long been a challenge for Three UK’s ability to invest and compete.
“Together, we will have the scale needed to deliver a best-in-class 5G network for the UK, transforming mobile services for our customers and opening up new opportunities for businesses across the length and breadth of the UK.
“This will unlock significant value for CK Hutchison and its shareholders, realise material synergies, reduce net financial indebtedness and further strengthen its financial profile.”