Vodafone strikes £15bn merger deal with Three
Vodafone signs £15bn merger deal with Three Tie-up to create Britain’s largest mobile network
Vodafone and Three yesterday signed a highly anticipated £15 billion merger deal to create Britain’s largest mobile network.
With a total of 27 million customers, the new joint venture will surpass EE and Virgin Media O2 to claim the top spot.
New Vodafone boss Margherita Della Valle described the deal as “a game-changer in our home market.”
But the announcement sparked fears of higher prices for consumers.
The deal will be scrutinized by the Competition and Markets Authority (CMA) in a process that analysts say could take 18 months, and will also need to be approved for national security reasons.
Mobile giant: Vodafone and Three have reached a £15bn merger that new Vodafone boss Margherita Della Valle (pictured) described as ‘a game-changer’
The aim is to create a joint venture 51 percent owned by FTSE 100 giant Vodafone and 49 percent owned by Hong Kong-based CK Hutchison, the current owner of Three.
Union Unite wants the cooperation to be blocked, fearing it will lead to job losses and higher bills.
It warned of CK Hutchison’s involvement, saying the merger would place a company with “deep ties to the Chinese state.” [in] an even more prominent place at the heart of the UK telecommunications infrastructure’.
The deal, announced after months of talks, is to be completed by the end of 2024.
The company will have a combined value of £15bn and threatens to disrupt Britain’s fiercely competitive mobile market.
Currently, Vodafone is the UK’s third largest operator after Virgin Media O2 and BT-owned EE, while Three ranks fourth.
Della Valle said the merger would be “great for customers, great for the country and great for the competition.”
Observers pointed out that plans for a partnership on a similar scale between Three and O2 were blocked by match officials in 2016.
But Della Valle said the market has “moved on” since then and the deal was needed to boost the UK’s mobile and digital infrastructure.
She added: ‘This is a vote of confidence in the UK and its ambitions to be a hub for future technology.’
The company plans to invest £11bn in the UK over ten years in a bid to create “one of Europe’s most advanced standalone 5G networks”.
The companies plan to cut costs by £700m a year, but said it was too early to put a figure on how many jobs are likely to be affected, or say whether any offices will close.
They insisted the deal would boost the combined workforce, creating 8,000 to 12,000 new jobs in the UK.
Della Valle was confirmed as permanent CEO of Vodafone less than two months ago after Nick Read was ousted.
Victoria Scholar, head of investment at Interactive Investor, said: “This will probably be Della Valle’s biggest achievement to date if the deal crosses the line.”
Vodafone UK head Ahmed Essam will lead the merged company.