Vodafone and CK Hutchison, which owns Three UK, are planning to merge their UK businesses. The deal will first need to be approved by the Competition and Markets Authority (CMA), which has made the international press in recent months for blocking Microsoft’s acquisition of Activision Blizzard.
If the merger is approved, it’ll mean that there’ll be just three mobile networks. The other remaining players will be EE (which formed as a merger of T-Mobile UK and Orange UK) and O2. Under the deal, Vodafone will be the majority stakeholder, controlling 51% of the business while CK Hutchison will control the remainder.
Vodafone UK CEO Ahmed Essam will run the new enterprise as CEO while Three UK CFO Darren Purkis will become the new enterprise’s CFO. Over the next ten years, the new organization says it will invest £11 billion in the UK to create an advanced standalone 5G network that will aim for UK government targets.
“The merger is great for customers, great for the country and great for competition,” said Margherita Della Valle, Vodafone Group Chief Executive. “It’s transformative as it will create a best-in-class – indeed best in Europe – 5G network, offering customers a superior experience.”
Canning Fok, Co-Managing Director of CK Hutchison called the announcement a major milestone for the company in the UK and that the merger would allow them to continue delivering services in the country sustainably, which is not the case right now.
Vodafone and Three UK currently have several mobile virtual network operators (MVNOs) using their networks to deliver services. It’s unclear how the merger will affect MVNOs but these companies could always switch to another network and issue new SIM cards to customers if it became necessary.
The two companies said the new company will also deliver broadband services to 82% of homes by 2030. With a reduced number of companies in the mobile space, we could ultimately see higher prices for mobile services.