Vodafone and Three announce ‘gamechanger’ merger to create UK’s biggest 5G network

Vodafone and Three have announced plans to merge their UK operations to create the country’s biggest network.

Owner CK Hutchison Group confirmed the plans on Wednesday (14 June) as part of a deal to create a new European 5G giant.

The new enterprise aims to dedicate £11 billion towards establishing the network over 10 years.

Margherita Della Valle, chief executive of Vodafone Group, said “this transaction is a gamechanger” and “is a vote of confidence in the UK and its ambitions to be a centre for future technology.”

She added that the merger is “transformative as it will create a best-in-class, indeed best-in-Europe, 5G network, offering customers a superior experience.”

Canning Fok, group co-managing director of CK Hutchison, said Three UK and Vodafone UK “currently lack the necessary scale on their own to earn their cost of capital” and it has “ong been a challenge for Three UK’s ability to invest and compete.”

He added: “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.”

‘Still a way to go on getting this merger over the line’

Talks between Vodafone and CK Hutchison have been running since last autumn. Vodafone will have 51%, while CK Hutchison will have 49% of the combined business.

Alex Tofts, broadband expert at Broadband Genie, said the deal between the two phone firms “would create a power couple and a real force to be reckoned with in the mobiles market” however it “would still be at a disadvantage with some competitors, as it will struggle to make gains away from its mobile services.”

Mr Tofts said: “Unlike previous partnerships between BT and EE, and Virgin Media O2, this wouldn’t be able to offer anything new in terms of broadband or TV packages, as it doesn’t own any fixed-line infrastructure.

“Three has invested heavily in its mobile broadband but as the adoption of 5G tech is still low, and coverage is a major issue for many households, this partnership would still rely on other providers for its most popular broadband deals.”

He added: “There is still a way to go on getting this merger over the line, and as Ofcom and the Competition and Markets Authority tend to be wary of mobile-only mergers, we may still see these efforts come to nothing.”

On social media, customers have reacted to the news with one user saying they “can’t wait to see what this collaboration will bring”.

While another said: “The network that you would put the worst credit customers on, combined with the UK’s most failing network for service. Sounds like another loss for consumers.

“All end up in higher monthly bills to cover the costs of the merger.”