The merger between Vodafone and Three has been approved.

The regulator has approved the deal to create the UK’s largest mobile network, serving 27 million customers, with the condition of implementing 5G upgrades.

Vodafone and Three have received approval to merge, forming the UK’s largest mobile operator, following a commitment to significantly upgrade the combined network across the country. The Competition and Markets Authority (CMA) has stipulated that the companies invest in 5G expansion and provide temporary protections against price hikes for customers.

The £16.5bn deal will combine the third and fourth largest operators in the UK, creating a network serving over 27 million subscribers. Despite strong opposition from BT and concerns over rising customer costs and competition, the CMA had signaled its likely approval last month.

The merger is contingent on Vodafone and Three spending £11bn on network upgrades, with the CMA affirming that the deal would enhance competition over time. The merger is expected to be finalized in the first half of next year.

Vodafone CEO Margherita Della Valle commented that the approval would “unlock” the UK telecoms market, emphasizing that the deal would be self-financed and would not incur additional public funding or customer costs. Under the agreement, the merged entity must maintain existing mobile tariffs and data plans for at least three years and uphold competitive wholesale terms for mobile virtual network operators, such as Sky Mobile and iD Mobile.

The merger, first announced in 2023, faced scrutiny in September when the CMA expressed concerns about potential price increases for customers. However, it required binding commitments from the companies, including substantial investments in network infrastructure.

Della Valle further highlighted that the deal would lead to better coverage, faster speeds, and higher-quality connections across the UK. Canning Fok, Deputy Chairman of Three’s parent company CK Hutchison, emphasized that the investment plan would transform the UK’s digital infrastructure and improve service quality for customers.

Vodafone will hold 51% of the new company, with plans to buy out Hutchison’s 49% stake after three years. CMA chair Stuart McIntosh affirmed that the merger, under strict conditions, was expected to strengthen competition in the mobile sector. Ofcom and the CMA will oversee the implementation of the commitments to ensure the UK’s 5G capabilities are improved while preserving competition.

Analyst Karen Egan of Enders Analysis supported the decision, noting that combining high-quality networks rather than maintaining multiple weaker ones would better serve consumers and businesses, breaking the cycle of low investment in the sector.