British telecom firms Vodafone Group Plc and CK Hutchison Group Telecom Holdings Limited, a subsidiary of CK Hutchison Holdings Limited, have finalised their £16.5 billion ($20.96 billion) merger to create VodafoneThree, the UK’s largest mobile operator. The deal, originally announced in June 2023, merges the UK operations of both companies to better compete with BT and Virgin Media O2.
The UK Competition and Markets Authority (CMA) approved the deal in December last year after initially raising concerns that the merger could lead to higher bills for millions of customers. Approval was granted only after both companies agreed to roll out a joint 5G network.
On June 2, the companies announced that VodafoneThree will invest £11 billion ($14 billion) over the next 10 years to build “one of Europe’s most advanced 5G networks,” promising significantly improved mobile experiences for millions of customers and businesses across the UK. In its first year, VodafoneThree plans to invest £1.3 billion ($1.65 billion) in capital expenditure.
“This will enable the company to accelerate its network deployment. Consistent with previously communicated expectations, the combined business is expected to deliver cost and capex synergies of £700 million per annum by the fifth year after completion, and the transaction is expected to be accretive to Vodafone's adjusted free cash flow from FY29 onwards. Full alignment to Vodafone’s accounting policies is ongoing, and pro forma financials will be provided in due course,” the statement added.
Vodafone said it will fully consolidate VodafoneThree in its financial results. Vodafone has appointed its current UK CEO, Max Taylor, to lead the combined entity. Darren Purkis from CK Hutchison Group Telecom has been named Chief Financial Officer.
“This investment is also central to the UK’s economic growth prospects—vital for the science and technology sectors, for improving public services, and for narrowing the digital divide across the country. This significant investment in a standalone 5G network will propel the UK’s mobile infrastructure to the forefront of European connectivity,” the British telecom firm said.
“We are now eager to begin our network build and rapidly bring customers greater coverage and superior network quality. The transaction completes the reshaping of Vodafone in Europe, and following this period of transition, we are well-positioned for growth ahead,” said Vodafone Group Chief Executive Margherita Della Valle.
“As we’ve demonstrated in other European markets, scale enables the significant investment needed to deliver the world-class mobile networks our customers expect. The Vodafone and Three merger provides that scale. In addition, this transaction unlocks significant shareholder value, returning approximately £1.3 billion in net cash to the Group,” said Canning Fok, Deputy Chairman of CK Hutchison and Executive Chairman of CKHGT.
