Vodafone and CK Hutchinson, the parent company of Three UK, are poised to announce a multi-billion pound merger that could reshape the telecommunications landscape in the UK. The new entity is expected to have a total value of approximately $18.86 billion, comprising an equity value of $11.3 billion and a debt of $7.54 billion.
If the merger proceeds, the combined company would become the world’s largest mobile operator, serving around 28 million customers. However, the consolidation would reduce the number of mobile operators in the UK to three, a move that regulators had previously blocked. A proposed merger between Three UK and O2 in 2016 was rejected on competition grounds. This deal would also result in CK Hutchinson, a Hong Kong-based business, exiting the UK market.
Reports of the merger between Vodafone and Three UK first emerged a year ago when Vodafone faced investor pressure to divest underperforming assets and pursue opportunities in competitive markets such as the UK, Italy, and Spain. The deal has faced several delays, including the departure of Vodafone’s CEO Nick Read in 2022, as the company searched for a replacement.
Under the proposed agreement, Vodafone would hold a 51% stake in the new company, with CK Hutchinson holding the remaining share. CK Hutchinson would eventually sell its stake to Vodafone after the merger of Vodafone UK and Three UK. However, the entire process is expected to take at least another year as regulators undertake a thorough approval process.
Regulators are likely to scrutinize the merger closely due to concerns about market consolidation leading to increased market power and higher prices for consumers. Earlier this year, most UK mobile operators raised their tariffs by approximately 14%, highlighting the potential impact on consumer costs.
