(Technical rehearsal)

LONDON/HONG KONG (Reuters) – Vodafone and CK Hutchison on Wednesday formalized the merger of their UK operations in a 15 billion pound (17.56 billion euros) deal, pledging to create the most major British mobile operator to stimulate competition and invest in the country’s economy.

The two companies provided details of the deal in a long-awaited announcement, as the two companies revealed they were in talks as early as October

Vodafone will hold 51% of the new group and Hutchison 49%. Current Vodafone UK boss Ahmed Essam will lead the merged structure and Darren Purkis, Three UK’s current chief financial officer, will serve in the same role.

The merged operator will have around 27 million customers, surpassing EE () and VM O2, jointly owned by Telefonica and Liberty Global.

Vodafone, currently Britain’s third-largest mobile operator, and Hutchison, fourth, will have options that will allow Vodafone to acquire the Hong Kong-based conglomerate’s 49% stake in the future.

The deal will come under scrutiny from regulators, who have previously opposed deals that would have reduced the number of networks in major markets from four to three.

Seeking to win backing from politicians, unions and the competition regulator, the two groups said they would invest £11billion in Britain over 10 years to create what they describe it as “one of the most advanced standalone 5G networks in Europe”.

The two groups believe they can save £700m a year from the merger.

Canning Fok, co-chief executive of CK Hutchison, said Three UK and Vodafone UK lacked the scale to meet their cost of capital.

(Report Paul Sandle in London and Clare Jim in Hong Kong, Victor Goury-Laffont, edited by Kate Entringer)

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