The merger, which will only affect the UK operations of the two telcos, will create Britain's largest mobile operator.
Vodafone. Photo: Xavi Torrent/Getty Images
Adrian Weckler
Vodafone and Three have agreed to a UK merger that would see the two telecommunications companies create Britain's largest mobile operator.
The measure will not include the Irish operations of the companies.
The merger must be approved by the UK Competition and Markets Authority to proceed. Under the terms of the deal, Vodafone will own 51% of the new entity, and Hong Kong-based Three's CK Hutchison will own 49%.
CK Hutchison's group co-managing director Canning Fok said the merger was necessary for investment reasons.
โThree UK and Vodafone UK currently lack the scale on their own to earn their cost of capital,โ he said.
โThis has long been a challenge to Three UK's ability to invest and compete.
"Together, we will have the scale to deliver best-in-class 5G to the UK, transforming mobile services for our customers and unlocking new opportunities for businesses across the UK.
"This will unlock significant value for CK Hutchison and its shareholders, generate significant synergies, reduce net financial leverage and further strengthen its financial profile."
Three UK's chief executive is Irishman Robert Finnegan, who has been the managing director of the Irish operation since 2005.
In the company's most recent quarterly results, he complained that telcos are not earning enough to cover their capital costs and has been pushing for consolidation for more than a year.
"Today's news marks a significant step in our efforts to build a business that will build the nation's largest and fastest 5G mobile network," he said.
โThe combination of Three UK and Vodafone UK will bring the benefits of 5G to all UK businesses and homes, enabling the UK to deliver on its digital and economic growth ambitions and fully supporting the UK Government's objectives for a world's leading digital economy. .โ
