Vodafone has promised to invest more than £1bn in expanding its network coverage in the next year, as it sealed a £16.5bn merger with its former mobile rival Three UK.
The new business, named VodafoneThree, will invest £11bn in its coverage over the next decade, in line with commitments agreed with the UK competition regulator last year. It will invest £1.3bn in capital expenditure projects in its first year, the company said on Monday.
The merger between Vodafone’s domestic business and Three UK, which was first announced in 2023, represents the biggest shake-up in years in the British telecoms industry. It reduces the four main network operators to just three, alongside BT/EE and Virgin Media O2.
The merger of the UK’s third and fourth biggest operators will create a network with more than 27 million subscribers.
While the Competition and Markets Authority (CMA) initially warned that millions of customers could face higher bills as a result of the merger, it gave the deal the green light last year, subject to a set of legally binding commitments.
The regulator dictated that the new company must spend £11bn on upgrading its combined network and commit to retaining certain existing mobile tariffs and data plans for at least three years, including on sub-brands. It also said the company must promise to upgrade 5G coverage and offer short-term customer protections against price rises.
The Unite union had warned that the merger could lead to up to 1,600 job losses. However, Vodafone has rejected the figure, and said the deal would ultimately lead to more jobs being created.
VodafoneThree said the first year of its capital expenditure project would involve bringing in technology to enable “multi operator core network (MOCN) functionality”, which allows customers to access the other operator’s network.
The Vodafone group owns 51% of the new company, while Three UK’s previously sole owner CK Hutchison owns 49%.
Margherita Della Valle, the Vodafone chief executive, said the merger would create a “new force in UK mobile” and “transform the country’s digital infrastructure”.
“We are now eager to kick off our network build and rapidly bring customers greater coverage and superior network quality. The transaction completes the reshaping of Vodafone in Europe, and following this period of transition we are now well-positioned for growth ahead,” she added.
Della Vale, who became chief executive in 2023, has been tasked with reviving the fortunes of the FTSE 100 company. She has now secured three big deals in the highly regulated industry in less than two years; the VodafoneThree merger follows the sale of two struggling businesses in Spain and Italy.
