Telecoms: Vodafone and Three are preparing to merge in the United Kingdom

This time, it would be a matter of a few weeks. Eight months after the official start of discussions, Vodafone and the Hong Kong conglomerate CK Hutchison should finally merge their activities in the United Kingdom by the end of May, reported Thursday the “Financial Times”, citing sources familiar with the matter. A structuring marriage for the telecom landscape across the Channel, since it would create the number 1 mobile phone in the country, with 28 million customers. And would reduce the number of operators from four to three, which risks giving ideas to players in the sector on the European continent, particularly in France.

The merger between Vodafone UK and Three (the British operator owned by CK Hutchison) would take place on the basis of an enterprise value of 15 billion pounds sterling (17 billion euros), including 6 billion in debt, according to the British daily. As announced in October, Vodafone would hold 51% of the whole. Eventually, CK Hutchison could however sell its remaining 49% to Vodafone, and thus leave the United Kingdom.

power vacuum

If the project resurfaces, it means that the “power vacuum” at the head of Vodafone is over. Last week, Margherita Della Valle, the chief financial officer since 2018, was officially appointed CEO of the operator. The 58-year-old Italian had been acting since the start, at the end of December, by Nick Read, against a backdrop of shareholder dissatisfaction.

However, until now, this uncertainty at Vodafone had considerably slowed down the merger project with CK Hutchison. The file is however strategic for Vodafone, whose stock market price has been halved in five years. To raise the bar, Vodafone has been trying for months to refocus on its biggest markets, while the British giant is present in 21 countries.

For this purpose, the subsidiary in Hungary has been sold. But two other projects fell through: in Italy, Vodafone rejected Iliad’s €11 billion offer. In Spain, the merger with MasMovil did not happen either, to the delight of Orange which will merge its Spanish business with MasMovil. These two failures had contributed to push Nick Read towards the exit.

However, there is still a long way to go since the Vodafone-Three merger will have to get the green light from the British CMA, the UK competition watchdog, and from Ofcom, the telecoms regulator. The two authorities now seem more in favor of a three-operator market. But they will remain very vigilant on the impact for consumers, in a context of generalized inflation which is already driving up the price of packages.