Vodafone set to announce mega-merger with Three in move to create the UK’s largest mobile operator
Vodafone is set to announce a mega-merger with rival Three as soon as tomorrow in a move that will create the UK’s largest mobile operator.
The FTSE 100 telecoms giant and Three’s Hong Kong owner CK Hutchison are in the final stages of a drawn-out negotiations to combine the latter with Vodafone’s UK business.
A tie-up is expected to see Vodafone control 51pc of the business, with Hutchison owning 49 per cent. The announcement is expected tomorrow or early next week.
Analysts expect the new entity to be valued at around £15bn, slightly larger than BT, which owns the EE network.
Tie-up: Vodafone and Three’s Hong Kong owner CK Hutchison are in the final stages of a drawn-out negotiations to combine the latter with Vodafone’s UK business
The new operator will have around 28m customers, more than EE and Virgin Media O2, which is co-owned by US telecoms giant Liberty Global and Spanish firm Telefonica.
The two sides are thought to have been in talks for around a year as they tried to finalise details around possible cost savings and streamlining.
Analysts have said a merger could transform Three, which has been struggling to compete against its larger rivals and failed to make headway from its position as Britain’s fourth-largest mobile operator.
Any deal is likely to face intense scrutiny from regulators following a blocked takeover of O2 by Three in 2016.
Concerns have been fuelled by the Competition and Markets Authority’s decision to prevent a merger of tech giant Microsoft with Call of Duty maker Activision Blizzard.
But the watchdog could be under pressure to wave through the deal following criticism of the UK’s crowded mobile market, which many in the industry have blamed for stifling innovation and investment as operators are forced to drive down prices to compete with rivals.
A merger with Three is also in the interests of Vodafone’s boss Margherita Della Valle, who took over the job on a permanent basis in April.
She is under pressure to decisively boost its fortunes and revive its share price, which is at its lowest level in over 15 years.