Telecom providers Vodafone and CK Hutchison are said to be planning a £ 15 billion Mobile merger in the UK.
The British mobile giant Vodafone and CK Hutchinson, which operates the British mobile network Three, are “ready” to announce a combination of their British telecom operations worth £ 15 billion. The FT cites three Insider sources for the coverage.
Such an agreement would create the country’s largest mobile operator, with more than 28 million customers. The sources also confirmed that such a deal would value the combined group’s equity at around £ 9 billion. In addition, the new company would have approximately £ 6 billion of debt, bringing the enterprise value of the new organisation to a total of approximately £ 15 billion.
The FT expects the deal between Vodafone and Three, which has been working on since last fall, to be announced later this month. This would follow the appointment of insider Margherita Della Valle as chief executive of Vodafone. The appointment of Della Valle, a financial tycoon who has worked for Vodafone in Italy and the UK for nearly 30 years, comes after “months of uncertainty over who would permanently lead the UK telecom group,” the sources told the FT.
While the merger agreement may make sense from a business standpoint, it poses a whole host of potential problems for UK regulators. According to the FT, such a deal would “pave the way for a protracted political and competitive struggle”. The UK Competition and Markets Authority (CMA ) has generally opposed mergers that could lead to a greater concentration of market power. The FT even points out that a similar deal between Three UK and O2 was blocked in 2016.
However, in addition to the antitrust aspect, the combination would also allow Hong Kong-based CK Hutchison to exit the UK telecom market. FT notes that the UK Government has begun to use its new powers under the National Security and Investment Act to review and sometimes reject foreign party transactions involving UK assets “deemed important to national security”.
