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Britain's Vodafone, Three mobile phone providers to merge


Britain's Vodafone and Three said Wednesday they will merge to form MergeCo, the country's largest mobile phone network. Vodafone will hold the majority stake in the newly formed entity, pending regulatory approval. File photo by TOLGA AKMEN/EPA-EFE

June 14 (UPI) -- Britain's Vodafone and Three mobile phone networks announced plans Wednesday to merge to form the country's largest cell phone operator with 27 million customers.

Vodafone Group and Three-owner CK Hutchison Group Telecom said the agreement will see Vodafone the majority stakeholder with 51% of MergeCo with plans to spend $14 billion to create one of Europe's most advanced 5G networks, Vodafone said in a news release.

Vodafone Group CEO Margherita Della Valle hailed the merger as being "great for customers, great for the country and great for competition" with MergeCo claiming a million customers will enjoy greater coverage and reliability with 5G network penetration of 99% and a six-fold increase in average data speeds by 2034.

"It's transformative as it will create a best-in-class -- indeed best in Europe -- 5G network, offering customers a superior experience. As a country, the U.K. will benefit from the creation of a sustainable, strongly competitive third-scaled operator -- with a clear $14 billion network investment plan -- driving growth, employment and innovation," said Della Valle.

"For Vodafone, this transaction is a game changer in our home market. This is a vote of confidence in the U.K. and its ambitions to be a center for future technology."

No cash will change hands in the deal and the agreement includes an option for Vodafone to acquire Hutchison Telecom's 49% stake, possibly paving the way for an exit from Britain's telecoms sector for the company, which is part of the Hong Kong conglomerate CK Hutchison Holdings.

Over the next seven years, the merger will also bring as much as $6.34 billion a year in economic benefits to Britain's economy creating jobs and supporting the digital transformation of business, Vodafone said pledging standalone 5G for every school and hospital in the country.

Three U.K. CEO Robert Finnegan said the deal marked a "significant step in our efforts to create a business that will build the biggest and fastest 5G mobile network in the country."

"The combination of Three UK and Vodafone UK will bring the advantages of 5G to every business and household in the UK, enabling the UK to deliver its ambitions for digital and economic growth and fully supporting the U.K. Government's objectives for a world-leading digital economy."

The deal will see MergCo jumping ahead of EE, owned by BT, and Virgin Media O2, owned by Spain's Telefonica and the United States' Liberty Global -- the current no. 1 and no. 2 networks -- to become the largest provider.

However, Della Valle, who last month announced plans to slash Vodafone's 104,000 global workforce by 10% as part of a strategy to revive the shrinking fortunes of Vodafone, has first to get the deal past investors and the tough anti-trust stance of British regulators.

But after long arguing that cutting the number of networks from four to there might be bad for consumers, the Competition and Markets Authority recently shifted its position saying it now held a more favorable view of amalgamation in the sector.