Vodafone has confirmed three UK merger talks

Operator Vodafone has confirmed its merger with rival mobile provider Three UK, revealing a move that analysts predict could transform the UK’s 5G and communications industry, giving BT/EE and recently merged O2/Virgin Mobile real competition. trying to be

The two companies have made no secret of their interest in a merger. In a statement, Vodafone confirmed that it is in talks with three UK parent companies, CK Hutchison Holdings Ltd, over a possible business combination. The proposed transaction will see both companies combine their UK businesses, with Vodafone owning 51%, and CK Hutchison owning 49% of the combined business.

Vodafone said: “By combining our businesses, Vodafone UK and ThreeUK will gain the necessary scale to be able to accelerate. Full roll-out of 5G in the UK And Expand broadband connectivity to rural communities and small businesses.

“The combined business will challenge the two already consolidated players and bring benefits to all UK customers through competitively priced access to a third reliable, high-quality and secure 5G network across the UK.”

Vodafone added that the relative ownership will be acquired through a “differential leverage” contribution without a cash consideration when closing the deal.

Any potential deal will be subject to rigorous regulatory scrutiny by the UK Competition Authority and UK communications regulator Ofcom.

A statement from the regulator in February 2022 The first raised expectations of a possible merger between operators, launching a discussion document in which it set out initial thoughts on future demand for mobile services and how mobile networks should evolve to meet that demand.

Mobile networks must evolve to meet future demands and deliver the quality of experience required by consumers and businesses, warns discussion paper Determines the future direction of the mobile market, clarifies the operator’s position on mobile consolidation, commenting that its position on potential mergers will be informed by specific circumstances rather than just the number of competitors.

In response to Ofcom’s plans at the time, Three U.K Consolidation in the industry, he said, could change how the UK got mobile infrastructure without the standard it deserved, with investment spread too thinly across many players, meaning networks were on a par with international standards. Three mention that seven of the top 10 countries in Europe Connect Network Quality 2020 Testing There was a three-player market.

“The main motivation for joining forces is scale. In telecommunications, the most successful companies tend to be the largest; Bulking up will provide many synergy and cost-saving opportunities. Under the status quo, it is difficult to see any operator growing organically enough to come close to challenging BT and Virgin Media O2 for size in the UK,” said Kester Mann, director of consumer and engagement at analyst firm CCS Insights.

“Not so long ago, the tie-up between Vodafone and Three would have felt like an unnatural pairing. But in recent times, Vodafone has taken on a challenger role in its home market, so the two operators’ strategies may not be too far apart.

“If any deal is implemented, regulation will be a major hurdle. It will be up to the competition authorities to decide whether reducing the number of players is in the overall good of the market. Advocates will argue that this encourages investment; Dissenters will claim that this is a reason to raise prices.”

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