The companies said there is “no cash consideration to be paid” in this merger and it would also include debt from both businesses.

The combined business, if calculated using today’s users numbers, would have around 28 million subscribers — Vodafone has nearly 18 million and Three has just over 10 million as of May 2023) — and would be worth some £15 billion (nearly $19 billion at today’s rates), and would be 51% owned by Vodafone and 49% owned by Hutchison.

The companies said that they expect the merger to be completed by the end of 2024 — subject to regulatory approvals.

That might not be as seamless as it sounds. Previous carrier mergers have taken years and years to work through, and they have not necessarily worked out as the parties have hoped they would. Back in 2015, Hutchison famously tried to acquire Telefonica’s UK business, called O2, to combine it with Three for £10.25 billion.

That deal was quashed by regulators, then appealed, only to finally once again get quashed… but even up to this day, it’s being reconsidered in the courtroom. That’s right, eight years later, and while Three pursues a different combination, it’s still embroiled in regulatory red tape over a different deal.

This latest deal between Vodafone and Three has been in the works for months, so not quite as long — not even behind closed doors. Three U.K.’s CEO Robert Finnegan in March said that his company’s network would be “unsustainable” without a merger with Vodafone. A deal was expected to be announced this week.

Combining would indeed give both companies much greater economies of scale when it comes to building out costly network for 5G and beyond, as well as in operating it.

Vodafone back in the 1990s and early 2000s was the country’s biggest mobile carrier. It then lost that position to O2 and EE (which itself was formed from a consolidation of T-Mobile UK and Orange UK). Three was always a late entrant to the UK market, coming into the frame with the arrival of 3G in the late 1990s. All of these carriers, however, are contending with what is a finite market, hence the turn to consolidation to improve margins in what is a thin-margin business.

It also comes at a time when tension continues to exist between carriers, tech companies and media giants. Consumers are using smartphones, and mobile networks, to consume a huge amount of content these days, but in many ways carriers have been disaggregated from the most lucrative part of that relationship — owning the customer and making a cut on payments for those media services. Thus, there remain a lot of questions and disagreements over who should be carrying the cost can for that service, and whether carriers are getting a significant cut on revenues from that.

“Today’s announcement is a major milestone for CK Hutchison and for the UK. Three UK and Vodafone UK currently lack the necessary scale on their own to earn their cost of capital,” said Canning Fok, group co-MD of CK Hutchison, in a statement. “This has long been a challenge for Three UK’s ability to invest and compete. Together, we will have the scale needed to deliver a best-in-class 5G network for the UK, transforming mobile services for our customers and opening up new opportunities for businesses across the length and breadth of the UK. This will unlock significant value for CK Hutchison and its shareholders, realise material synergies, reduce net financial indebtedness and further strengthen its financial profile.”

The companies added that “The Transaction is expected to result in substantial efficiencies. These are expected to amount to more than £700 million of annual cost and capex synergies by the fifth full year post-completion, with an implied NPV of over £7 billion.”

The companies said that they would commit £11 billion to building more network in the U.K. over the next decade, focusing on 5G. It would also expand its fiber network for fixed broadband access to cover 82% of housholds by 2030.

“The merger is great for customers, great for the country and great for competition. It’s transformative as it will create a best-in-class – indeed best in Europe – 5G network, offering customers a superior experience,” said Margherita Della Valle, Vodafone Group Chief Executive, in a statement. “As a country, the UK will benefit from the creation of a sustainable, strongly competitive third scaled operator – with a clear £11 billion network investment plan – driving growth, employment and innovation. For Vodafone, this transaction is a game changer in our home market. This is a vote of confidence in the UK and its ambitions to be a centre for future technology.”