by Paul Sandle
LONDON (Reuters) – Britain approved on Thursday the merger between Vodafone UK and Three UK, a subsidiary of Hong Kong conglomerate Hutchinson, a deal worth $19 billion (18.05 billion euros) which will create the largest mobile operator in the country.
Although the UK’s Competition Authority (CMA) said the deal could lead to higher prices for customers, it ultimately validated the two companies’ promise to invest in 5G networks and offer protections to retail and wholesale customers.
“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 the measures we have proposed,” said the CMA.
The green light from the competition watchdog follows British Prime Minister Keir Starmer’s call for regulators to prioritize economic growth.
It is also a major change from the CMA’s previous advice, which found that four operators were needed to ensure competition and keep consumers’ bills low.
Vodafone and Three have committed to spending £11 billion (€13.30 billion) to build a better 5G network that will serve 50 million customers.
The CMA said the investment will boost competition between the three remaining networks, including current market leader BT, and would ultimately deliver a better service to customers.
The combined group will also have to cap certain SIM card-only prices and offer fixed contract terms to virtual mobile operators, such as Tesco Mobile, Lebara and Sky, for three years.
Vodafone shares, which have lost more than half their value over the past five years, rose 1.2% at 09:36 GMT.
“Today’s approval releases the handbrake on the UK telecommunications industry, and increased investment will propel the UK to the forefront of European telecommunications,” said Margherita Della Valle, CEO of Vodafone.
Vodafone will own 51% of the combined company and will have the option to buy the rest after three years, subject to certain conditions.
(Reporting Paul Sandle; Diana Mandiá; editing by Augustin Turpin)
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