Vodafone, Three Merge U.K. Operations to Create 5G Giant, Promise $14 Billion Investment

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Vodafone Group Plc and CK Hutchison Group Telecom Holdings Limited (CKHGT), a wholly-owned subsidiary of Hong Kong’s CK Hutchison Holdings Limited, have signed formal agreements to merge thei…

In what is possibly an advance conciliatory nod to the CMA, the the owners have said that the merged entity will invest £11 billion in the U.K. over 10 years to create one of Europe’s most advanced standalone 5G networks, in full support of U.K. government targets. The merger will deliver up to £5 billion per year in economic benefit by 2030, create jobs and support digital transformation of the U.K.

Addressing the competition issue head on, Vodafone and CKHGT say that “the merger will create a third operator with scale, levelling the competitive playing field, increasing competition for the U.K.’s two leading converged operators and will also provide more choice in wholesale partners for the U.K.’s already competitive MVNOs [Mobile Virtual Network Operators].”

The merged entity will have a six-person board, comprising three directors appointed by Vodafone and three directors from CK Hutchison. Employees of both businesses will be afforded equal opportunities for relevant positions in the combined business. The transaction is expected to result in substantial efficiencies amounting to more than £700 million of annual cost and capital expenditure synergies by the fifth full year post-completion.

The current Vodafone U.K. CEO Ahmed Essam will become the new CEO, and current Three U.K. CFO Darren Purkis will take the role of CFO. The transaction is expected to close before the end of 2024, subject to regulatory and shareholder approvals.

 

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