Vodafone has announced its intentions to merge with Three, pulling together the UK’s two remaining standalone mobile networks. The move comes in a market that has seen major consolidations in recent years between Virgin Media's merger with O2 and BT Group's purchase of EE. If regulators approve the deal, Vodafone and Three's new company will become the largest mobile phone operator in the UK, with an estimated 27 million customers.
"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," (Three Owner) CK Hutchinson Group Co-Managing Director Canning Fok said in a statement. "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." Vodafone will own 51 percent of the company, while CK Hutchinson controls the rest.
The merger with Vodafone isn't the first time Three has tried to couple up with a competitor. In 2015, its parent company announced plans to buy O2 for £10.25 billion ($12.96 billion), but the European Commission and Competition and Markets Authority (CMA) blocked the purchase over concerns of "reduced competition" and "higher prices." However, O2 was able to merge with Virgin Media in 2021 after the CMA determined that similar concerns were unfounded. Vodafone and Three are attempting to sweeten the latest deal with a promise to invest £11 billion ($13.9 billion) across ten years in the UK's 5G infrastructure, in line with the government's targets.