Three owner Hutchison Whampoa has agreed terms with Spanish operator Telefonica to buy O2's UK network for £10.25 million.
The two entered exclusive negotiations over a tie–up back in January, following intense speculation about a merger at the end of 2014.
The deal will see Three become the largest mobile network in the UK, cornering a massive 41% of the market. That huge market share may concern regulators, who will spend the next year scrutinising the deal before it gets final approval.
In a statement, Telefonica said that approval will need to come by June 30th 2016. It’s receiving £9.25 billion up front, with a deferred payment of £1 million to be paid at a later date.
The announcement comes at a time of great upheaval in the UK mobile sector. BT is buying EE for £12.5 billion, while Sky is said to be plotting a MVNO partnership with Vodafone.
There remain concerns that the narrowing of the market down to just three main mobile operators could lead to higher prices for consumers, despite O2’s claims that “UK customers will benefit from greater value, quality and innovation".
Expect Ofcom and EU bodies to study this closely before giving Hutchison Whampoa the green light.