By Najat Kantouar


Vodafone Group's deal to merge its U.K. business with rival operator Three has been conditionally approved by the country's antitrust authority, putting an end to investigation that lasted more than a year.

The Competition and Markets Authority's decision marks a key milestone for Vodafone, Chief Executive Margherita Della Valle said in a call. The approval recognizes the important link between investment and better connectivity, and will pave the way for a more reliable infrastructure across the country, she added.

The U.K. currently rank 22nd out of 24 in Europe in terms of mobile-connectivity quality, according to the CEO.

The U.K. antitrust watchdog, which has been investigating the merger for 18 months, said on Thursday that the deal will likely boost competition in the U.K. mobile sector, but would only proceed if both companies implement certain conditions.

The merger will be allowed to proceed if U.K. telecoms group Vodafone and CK Hutchison Holdings' Three commit to deliver a joint plan to update the mobile network across the U.K. over eight years, it said. The companies also need to keep certain mobile tariffs and data plans for at least three years to ensure retail customers can secure good deals while the network improvements and investments are rolled out.

Both companies have pledged to invest 11 billion pounds ($13.97 billion) to create an advanced next-generation 5G network. The new network is expected to reach a wide range of the population and benefit over 50 million customers, Vodafone said. The pricing strategy won't change as a result of the merger, but connectivity quality will improve over time, Della Valle said.

The investment will require no public funding and will boost competition between the mobile network operators in the long term, according to Vodafone.

The merger is expected to complete during the first half of 2025. Vodafone would own 51% of the merged entity after three years following completion and subject to certain conditions, and the remaining 49% would be owned by the Hong Kong-based conglomerate. Vodafone said that it might acquire Hutchison's 49% stake via a put and call option later.

In European morning trading, Vodafone Group shares were up 0.84 pence, or 1.2%, at 70.64 pence. Shares have risen 3% year to date.


Write to Najat Kantouar at najat.kantouar@wsj.com


(END) Dow Jones Newswires

12-05-24 0531ET