The UK's Competition and Markets Authority has approved the £15 billion merger of the UK mobile networks of Vodafone Group PLC (LSE:VOD) and Three, based on legally binding commitments to invest in a 5G network and cap certain tariffs for three years.
After an 18-month review process, the antitrust watchdog green-lit the deal on the basis that the two companies to invest £11 billion over the next eight years to roll out a combined 5G network across the UK, with virtual mobile providers also to be given access to pre-set wholesale prices and contract terms.
The deal is expected to formally complete during the first half of next year, when Vodafone will own 51% of the equity and may acquire the remaining 49% from Three's Hong Kong owner Hutchison after three years, subject to certain conditions.
Vodafone boss Margherita Della Valle said the merger "creates a new force in UK mobile, unleashing more competition and investment to transform the UK telecoms landscape", with the investment building "the UK's biggest and best network".
The new network will reach 99% of the population and benefit over 50 million customers, the companies said, and use no public funding.
Investment will be overseen by both Ofcom and the CMA, with the merged company also required to publish an annual report setting out its progress on the implementation of the network plan.
Stuart McIntosh, chair of the independent inquiry group leading the CMA investigation, said: "It’s crucial this merger doesn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market.
"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 decision "releases the handbrake on the UK's telecoms industry, and the increased investment will power the UK to the forefront of European telecommunications".
The final details of today's decision, which are included in the publication of a final report by the inquiry group, need to be agreed by Vodafone and Three, otherwise the CMA said it will block the deal.
** Update: Adds details **