Vodafone, Three UK complete UK merger

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Vodafone, Three *** complete *** merger

After almost exactly two years of regulatory wrangling, Vodafone Group and CK Hutchison Group Telecom (CKHGT) Holdings have at last announced the successful merger of their respective *** mobile firms, Vodafone and Three ***.

The combined business will operate under the VodafoneThree brand, and is 51% owned by Vodafone and 49% by CKHGT. Vodafone will fully consolidate VodafoneThree in its financial results, and the new firm’s CEO will be Max Taylor, who currently leads Vodafone ***. Three ***’s Darren Purkis has been appointed chief financial officer.

VodafoneThree says it will invest £11bn over the next 10 years, creating what it claims will be one of Europe’s most advanced 5G networks, giving businesses up and down the country a vastly superior mobile experience. In its first year, VodafoneThree plans to invest £1.3bn in capex to enable the company to accelerate its network deployment. It added that significant investment in a 5G Standalone network will propel the ***’s mobile infrastructure to the forefront of European connectivity.

Vodafone and Three first announced plans to merge in June 2023, creating a joint entity with 27 million mobile subscribers in the *** and providing a response to BT’s 2016 purchase of EE, as well as the 2021 merger of Virgin Media and O2 to form VMO2. Vodafone and Three justified the combination by saying it would boost the roll-out of 5G infrastructure and allow greater scale to compete with the larger, converged telecoms and mobile players in BT/EE and VMO2.

Yet after it launched an investigation into the merger in October 2023, the ***’s 

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 (CMA) found that “tens of millions” of mobile customers could see the cost of their mobile packages go up or services such as data allowances reduced. While it acknowledged that the merger could improve the quality of mobile networks and bring forward the deployment of next-generation 5G networks and services, the CMA added that it considers these claims to be “overstated”, and that the merged entity would “not necessarily have the incentive to follow through on its proposed investment programme”.

The CMA also found that the wholesale market where virtual operators – such as Sky Mobile, Tesco Mobile, Lebara, Lyca Mobile and iD Mobile – resell airtime from the four network operators could see worse deals on offer through the reduction in competition from four to three suppliers.

After the CMA outlined ways in which Vodafone and Three could address its concerns, the deal was given a regulatory green light in December 2024 subject to a number of caveats – namely, Vodafone and Three delivering a joint network plan that sets out the network upgrade, integration and improvements they will make to their combined network across the *** over the next eight years; caps in selected mobile tariffs and data plans for three years to protect large numbers of customers from short-term price rises in the early years of the network plan; and offering pre-set prices and contract terms for wholesale services for three years.

Commenting on the completion of the deal, Vodafone Group chief executive Margherita Della Valle said: “The merger will create a new force in *** mobile, transform the country’s digital infrastructure and propel the *** to the forefront of European connectivity. We are now eager to kick off our network build and rapidly bring customers greater coverage and superior network quality. The transaction completes the reshaping of Vodafone in Europe, and following this ******* of transition, we are now well-positioned for growth ahead.”

Assessing the deal’s wider significance, technology, media and telecoms analyst

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described the announcement as a big day for the *** telecoms industry as a whole, regarding the new multi-brand approach as catering for specific market segments, providing plentiful opportunities for customer growth and selling more services.

“With a larger base, I would argue that the [combined] entity should focus on retaining its existing base in the short-term and seek to cross or upsell additional services to this larger group,” he said. “An attack on the fixed line market represents a significant opportunity for customer acquisition. This will consist of both fixed wireless access and fibre broadband.

“Three has demonstrated customer success with its home broadband FWA service,” said Pescatore. “We should expect to see this more broadly marketed and most likely at a slightly higher premium than the current offering … there should be a greater focus on the enterprise market given the promise of network leadership combined with its overall spectrum position. It will not be easy to integrate networks and ensure any stripping out does not impact disruption for customers. Make no mistake, the arduous work starts now.”

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#Vodafone #complete #merger

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