- Vodafone and CK Hutchison have said they are merging their UK mobile phone businesses.
- Vodafone would own a 51% stake in the newly formed “MergeCo”.
- The deal could face regulatory issues as the UK would only have three mobile operators.
Vodafone Group (WATER) and CK Hutchison, which owns British mobile phone network Three UK, have announced they will merge their UK telecoms businesses, months after they opened talks on a deal.
The companies said the deal would make Vodafone the majority shareholder with 51% in what is being called “MergeCo”. They said there was no cash consideration involved in the transaction. It is expected to close by the end of next year.
Vodafone UK chief executive Ahmed Essam will become chief executive of MergeCo and three UK CFO Darren Purkis will be CFO of the new firm.
Vodafone announced last October that it was in talks with its smaller rival, and Three UK’s Purkis noted in March that talks had been “progressive and positive”.
CK Huchison Group co-chief executive Canning Fok explained that the combination gives both companies “the scale needed to deliver the best 5G network in the UK, transform mobile services for our customers and open up new opportunities for businesses”.
The proposal could face regulatory hurdles as a merger between Vodafone and Three UK would leave the country with just three mobile operators.
American Depository Receipts (ADRs) Vodafone Group Plc rose 1.7% on the news on Wednesday morning after trading at a 27-year low on Tuesday.