Vodafone set to announce mega-merger with Three

Vodafone will announce a mega merger with rival Three tomorrow, creating the UK’s largest mobile operator.

The FTSE 100 telecom giant and Three’s Hong Kong owner CK Hutchison are in the final stages of protracted negotiations to combine the latter with Vodafone’s UK operations.

Vodafone is expected to own 51 percent of the company and Hutchison 49 percent. The announcement is expected tomorrow or early next week.

Analysts expect the new entity to be valued at around £15 billion, slightly larger than BT, which owns the EE network.

The new operator will have about 28 million customers, more than EE and Virgin Media O2, which is co-owned by US telecom giant Liberty Global and Spain’s Telefonica.

The two sides are believed to have been in talks for about a year as they tried to finalize details around potential cost savings and streamlining.

Analysts have said a merger could transform Three, which has struggled to compete with its larger rivals and failed to progress from its position as Britain’s fourth largest mobile operator.

Any deal is likely to come under intense scrutiny by regulators following a blocked takeover of O2 by Three in 2016.

Concerns have been fueled by the Competition and Markets Authority’s decision to prevent a merger of tech giant Microsoft with Call of Duty maker Activision Blizzard.

But the watchdog could be under pressure to push through the deal following criticism of the UK’s overcrowded mobile market, which many in the industry blame for stifling innovation and investment as operators are forced to lower prices to compete with rivals.

A merger with Three is also in the interest of Vodafone boss Margherita Della Valle, who took over the position in April.

She is under pressure to boost her fortunes decisively and revive her share price, which is at its lowest level in more than 15 years.