VODAFONE and Three owner CK Hutchison have agreed to merge their UK operations in a deal that will create Britain’s biggest mobile phone player worth a reported £15 billion.
The merged firm will be majority owned by FTSE 100 listed Vodafone, with 51 per cent of the combined business and CK Hutchison owning the remaining 49 per cent.
The groups said the tie-up will help them compete with their rivals in the roll-out of 5G, with the new company set to reach more than 99% of the UK population with their 5G standalone network.
The groups are expected to have a combined 27 million customers if the deal gets the go ahead, and will offer mobile home broadband to 82% of households by 2030.
They are aiming to complete the deal by the end of 2024.
Margherita Della Valle, chief executive of Vodafone, called the deal a “gamechanger”.
She 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 gamechanger in our home market. This is a vote of confidence in the UK and its ambitions to be a centre for future technology.”
Plans for “substantial” cost savings after the deal were also outlined – at more than £700 million within five years of the deal completing.
This will be through measures including merging IT systems and combining the marketing, sales, distribution and logistics activities, as well as cutting general and administration costs.
The combined business will be headed by Vodafone UK boss Ahmed Essam as chief executive, with current Three UK chief financial officer Darren Purkis taking on the same role at the merged group.
The groups pledged to invest £11 billion in the UK over the next 10 years to create one of Europe’s biggest 5G networks, promising that every school and hospital in the UK will have access to standalone 5G by 2030.
The deal comes after talks first began last autumn, but the tie-up is expected to face close scrutiny by competition watchdogs.