Vodafone UK and Three UK are to merge in a deal that will create the UK’s biggest mobile network, with around 28m customers. Vodafone will own 51 per cent of the combined business, with Three UK’s owner, CK Hutchison, owning the remaining 49 per cent.

The companies said the transaction is expected to result in substantial efficiencies of more than £700m of annual cost and capex synergies by the fifth full year post-completion, with an implied NPV (Net Present Value) of over £7bn. They also said that the combined business will invest £11bn over 10 years to create one of Europe’s most advanced standalone 5G networks, in full support of UK Government targets.

Current Vodafone UK CEO Ahmed Essam will become the CEO of the merged business, with current Three UK CFO Darren Purkis taking the role of CFO in the new business. The Transaction is expected to close 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 £11bn 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.”