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Telefonica has finalised a deal to sell its O2 mobile phone network to Hutchison Whampoa for £10.25bn.

The companies said they had reached a "definitive agreement" on a deal, which will create the UK's biggest mobile operator.

Hutchison, run by Hong Kong businessman Li Ka-shing, owns the Three mobile network, the UK's smallest operator.

The completion of the deal is subject to regulatory approval that could take up to a year and could face hurdles.

Combining O2 and Three would cut the number of major mobile operators in the UK from four to three.

The combined company would leapfrog EE, which has a 29% market share, to give it 41%.

O2 said the tie-up would create the UK's "most customer-centric mobile operator" and give customers greater value, quality and innovation.