By Lucy Kenningham
Vodafone and the owner of Three network, CK Hutchison, will announce a long-anticipated merger that will see them become the UK’s biggest mobile operator, according to reports.
Talks are now in the final stage and an announcement is expected “as soon as Friday or early next week”, according to reports from Reuters.
The new company will be owned 51 per cent by Vodafone to 49 per cent by Hutchison. Estimates suggest the combined group could be valued at around £15bn.
The respective stakes would be achieved by adjusting the ownership of debt rather than exchanging cash, the companies explained in October.
The merger, which will create the UK’s largest mobile operator, will amass 28m customers and cut the number of major operators in the UK from four to three.
Regulators will want to scrutinise the deal due to its impact on competitiveness in the industry.
“While the UK’s regulator has prevented the consolidation of the market from four to three players in the past, the investment required to deliver on 5G has changed the economics for operators and there is an argument to be made that the consumer will suffer unless the economics are improved,” said Dan Ridsdale, director of TMT at Edison Group.
Vodafone and Hutchison, however, say the deal will benefit consumers by creating a network through which to roll out full 5G and expand broadband connectivity.
There have been some positive developments – after a meeting between Hutchison’s top brass and government officials in March the government confirmed its “openness to market consolidation”.
Securing the deal should be a boost for Vodafone’s new CEOMargherita Della Valle after “cumbersome” leadership was blamed by some commentators for the sluggish deal making process.
Shares in the FTSE 100-listed telecoms company initially rose 3.3 per cent on the news.
Vodafone declined to comment when contacted by City A.M. Hutchison did not respond to a request for comment.
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