Vodafone inks a $19 billion merger deal with Hutchison to create UK largest mobile company
Vodafone and CK Hutchison have finally announced the long-awaited merger of their British mobile operations in a deal valued at 15 billion pounds ($19 billion). This exciting development, revealed on Wednesday, is expected to pave the way for a new dominant player in the market, stimulating competition and encouraging increased investments in the country.
The merger news comes less than a year after Vodafone joined forces with Altice to launch FibreCo, a €7 billion broadband startup joint venture in a challenge to challenge Deutsche Telekom and to also deploy a broadband network to seven million homes in Germany. Vodafone is currently Britain’s third-biggest mobile operator.
The long-awaited deal, after the two companies disclosed talks in October, will now trigger prolonged scrutiny by the anti-trust regulator into whether an operator with 27 million customers could lead to higher mobile prices.
After the two companies disclosed talks in October, the long-awaited deal will now undergo thorough scrutiny from anti-trust regulators. The focus of this scrutiny will be on whether the merger, resulting in a combined customer base of 27 million, could potentially lead to higher mobile prices, Reuters reported.
To garner support from various stakeholders, including politicians, unions, and competition authorities, the two companies have pledged a massive investment of £11 billion. This investment aims to establish one of the most advanced standalone 5G networks in Europe.
Expressing her excitement, Margherita Della Valle, Vodafone’s newly appointed CEO, referred to the deal as a “game changer” for the company’s domestic market. She emphasized that this development would be beneficial for customers, the country, and healthy competition.
Della Valle highlighted that the UK would experience positive outcomes, such as sustainable growth, increased employment opportunities, and innovative advancements, thanks to the clear £11 billion network investment plan spanning over a decade.
Under the agreed terms, Vodafone will hold a majority stake of 51%, while Hutchison will own the remaining 49% in the merged entity. Ahmed Essam, the current Vodafone UK boss, will assume the leadership role in the combined group, with Darren Purkis, the finance chief of Hutchison’s Three UK, taking on the same position in the new organization.
As a result of this merger, the combined operator will surpass BT’s EE and VM O2, jointly owned by Telefonica and Liberty Global, to become the leading mobile operator in the UK market.
Additionally, Vodafone will have the option to acquire the remaining stake from the Hong Kong-based conglomerate three years after the completion of the merger, subject to an agreement.