Vodafone and Three UK close £15bn deal: mega-merger set to create UK’s largest mobile phone operator
Vodafone and the owner of Three UK are approaching a £15 billion merger to create the country’s largest mobile phone operator.
Insiders suggest a deal could be struck this month between Vodafone and Hong Kong-based CK Hutchison, putting some 28 million customers in Britain on the combined books.
Analysts warn, however, that regulators may be concerned about a lack of competition.
The telecom giants have reportedly been in talks for nearly a year as both are under pressure to cut costs and streamline.
Phone deal: Insiders suggest a deal could be struck between Vodafone and Hong Kong-based CK Hutchinson by the end of this month
The deal will value the combined group at around £15 billion, according to the Financial Times.
It comes just a week after Vodafone said temporary CEO Margherita Della Valle will now fill the role permanently.
She was the chief financial officer, but became interim boss after Nick Read was ousted last year.
The search for a replacement lasted nearly five months, creating uncertainty as to whether anyone was willing to take on the role.
Karen Egan, telecoms expert at Enders Analysis, said the combination of Three and Vodafone could change the fortunes of struggling operators, with Three UK on a ‘downward spiral’ as the country’s smallest player behind EE, Virgin Media O2 and Vodafone, owned by BT.
Analysts have criticized Britain’s overcrowded telecoms market and are calling for consolidation to cut costs and boost technology investment.
But some are concerned about regulatory pushback that prevented Three’s acquisition of O2 in 2016.
PP Foresight analyst Paolo Pescatore said the Competition and Markets Authority (CMA), which blocked Microsoft’s acquisition of Call of Duty owner Activision Blizzard, could pose a threat.
“Its only chance of crossing the line is if both parties can demonstrate that this is in the genuine interests of UK plc,” he said.
Analysts at Enders suggest the CMA is not showing the “pro-business approach” needed to push the deal through. Vodafone shares fell 1.7 percent, or 1.64p, to 94.52p.
Vodafone and CK Hutchison declined to comment.