June 15, 2023: Vodafone and CK Hutchison, which owns the Three U.K. mobile network, approved to merge their U.K. businesses, following talks that have been ongoing since the previous year, the groups stated on Wednesday.
Vodafone will possess 51% of the combined firms, leaving CK Hutchison the minority stake.
“This long-awaited mega-merger represents the huge shake-up in the U.K. mobile market for over a decade,” Kester Mann, director for consumer and connectivity at CCS Insight, stated in emailed comments.
“The deal creates plenty of sense as both providers are sub-scale. As separate commodities, it would have been near impossible for either to grow enough organically to come close to challenging B.T. or Virgin Media O2 for size. Inevitably, there will be widespread fears regarding the job cuts.”
Current Vodafone UK CEO Ahmed Essam will manage the new enterprise. At the same, the present Three U.K. Chief Financial Officer (CFO), Darren Purkis, will take the CFO position at the merged business.
Vodafone has been transitioning since its former CEO, Nick Read, stepped down at the end of the previous year. In April, Vodafone appointed Margherita Della Valle as the permanent CEO to change the business.
The combination of Vodafone’s U.K. business and Three U.K. will reduce the number of mobile operators in the country to just three after the significant merger in the telecommunications sector in the past few years.
Vodafone, which was lagging behind larger rivals E.E., owned by B.T., and O2, which Telefonica and Liberty Global hold via a joint venture. B.T. acquired E.E. in 2016, while Telefonica and Liberty Global established Virgin Media O2 in 2021.
The deal will need approval from the U.K.’s Competition and Markets Authority (CMA), which has become increasingly powerful and looks to hamper big mergers and acquisitions. The previous month, the CMA moved to stop Microsoft’s $69 billion acquisition of gaming company Activision Blizzard.
