Vodafone and Three have agreed to merge their UK mobile businesses.

Following discussions that began last year, Vodafone and CK Hutchison, which operates the Three UK mobile network, decided to merge their U.K. operations, the firms said on Wednesday.

CK Hutchison will own a smaller stake in the merged company, with Vodafone owning 51% of it.

Current Three UK Chief Financial Officer (CFO) Darren Purkis will take over as CFO at the combined company, while current Vodafone UK CEO Ahmed Essam will serve as the new company's CEO. In order to build one of Europe's most cutting-edge standalone 5G networks in full support of the UK Government's ambitions, the newly merged business will invest £11 billion in the UK over a ten-year period.

The merger is still pending shareholder and regulatory clearances, although it is anticipated to be completed by the end of 2024.

Since Nick Read, the company's former CEO, left at the end of the previous year, Vodafone has been in a transitional phase. In order to modernise the company, Vodafone named Margherita Della Valle as its permanent CEO in April.

Following significant consolidation in the telecoms industry over the past several years, the merging of Vodafone's U.K. company with Three UK will leave only three mobile providers in the country.

Larger competitors EE, which is owned by BT, and O2, which is jointly controlled by Telefonica and Liberty Global, were ahead of Vodafone and Three. While Virgin Media O2 was being launched in 2021 by Telefonica and Liberty Global, BT bought EE in 2016.

The transaction will need to be approved by the U.K.'s Competition and Markets Authority (CMA), which has become more powerful and has been fighting large mergers and acquisitions. The CMA filed a motion last month to halt Microsoft's $69 billion acquisition of the game company Activision Blizzard.

(Sources: cnbc.com, bloomberg.com)