According to the terms of the agreement, Vodafone will own a 51% stake in the combined business, while CK Hutchison will hold the remaining 49% stake and the deal will not involve any cash consideration
Vodafone and CK Hutchison sign agreement to merge Vodafone UK and Three UK. (Credit: Andover - Vodafone Shop by Chris Talbot/Wikimedia Commons)
Vodafone Group and Hong Kong-based conglomerate CK Hutchison have signed a binding agreement to merge their UK telecommunication businesses Vodafone UK and Three UK, respectively.
According to the terms of the agreement, Vodafone will own a 51% stake in the combined business, while CK Hutchison will hold the remaining 49% stake.
The deal will not involve any cash consideration, stated Vodafone.
CK Hutchison group co-managing director Canning Fok said: “Three UK and Vodafone UK currently lack the necessary scale on their own to earn their cost of capital. This has long been a challenge for Three UK’s ability to invest and compete.
“Together, we will have the scale needed to deliver a best-in-class 5G network for the UK, transforming mobile services for our customers and opening up new opportunities for businesses across the length and breadth of the UK.”
The enlarged UK telecommunication business seeks to invest £11bn in Britain over ten years to develop advanced standalone 5G networks and contribute to the British government’s targets.
Besides, Vodafone said the combination of its subsidiary with Three UK will annually contribute up to £5bn in economic benefit by 2030 as well as generate jobs and support the digital transformation of schools, hospitals, and businesses in the country.
The combined company is projected to reach over 99% of the UK population with its 5G standalone network and aims to provide customers with up to a six-fold increase in average data speeds by 2034.
Vodafone Group chief executive Margherita Della Valle said: “As a country, the UK will benefit from the creation of a sustainable, strongly competitive third scaled operator – with a clear £11 billion network investment plan – driving growth, employment and innovation.”
By the fifth full year post-completion of the transaction, the annual cost and capex synergies of the combined firm are estimated to total over £700m with an implied net present value of more than £7bn.
Subject to regulatory and shareholder approvals, the transaction is anticipated to be complete before the end of 2024.
Last year, Vodafone Group confirmed media reports that it entered into discussions with CK Hutchison for the proposed merger between Vodafone UK and Three UK.