Hutchison Whampoa, the parent company of mobile network Three, has agreed to buy O2 UK from telecoms giant Telefonica in a deal worth £9.5bn.
The acquisition will create the largest mobile operator in the UK, accounting for 33 million customers nationally, putting EE in second place.
The firm said this coverage will provide Three with the “scale and financial strength necessary to be an even more effective and aggressive competitor" in the rapidly evolving UK telecoms sector.
Three CEO David Dyson said the combination of Three's leadership in mobile data and O2's strength in network coverage will bring "very real benefits" to business and consumers throughout the UK.
“The highly complementary network assets will deliver market-leading coverage and capacity for talk, text and data and will be well placed to satisfy rapidly growing demand,” he said.
The deal is expected to be completed in 2016, with £9.25bn to be paid at close and a further £1bn to be paid in a series of deferred upside interest sharing payments, subject to approval by EU competition regulators.
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Hutchison Whampoa group managing director Canning Fok said the acquisition displays the firm's confidence in the UK economy.
Debt-ridden firm Telefonica entered talks with Three earlier in 2015 in an attempt to shift non-core business O2.
Many have said this decision was set in motion after talks with BT over buying the mobile networks branch fell through, leading to BT subsequently buying EE instead.
But rather than increase competition, these acquisitions could lead to consumers only having three mobile providers – EE, O2-Three and Vodafone – to choose from, which could lead to price rises in the long-term.
This deal does not help Hutchison Whampoa towards its goal of being a “quad-play” operator in the UK as O2 does not currently offer TV or fixed line services in the UK.