It has possibly been one of telecoms worst kept secrets, ever since Vodafone and CK Hutchison confirmed they were talking about a merger last October, but now the two have formerly entered into binding agreements relating to their UK telecommunication businesses.
The combined business (Mergence) will be 51% owned by Vodafone and 49% by CKHGT and according to Vodafone Group Chief Executive, Margherita Della Valle, it’s going to be great!
Well at least that is the message “great for customers, great for the country and great for competition.” which is also reflected on the MergeCo microsite vodafoneandthree.uk
The announcement flags a range of benefits for the UK and customers including the suggestion that the merger will create jobs and support digital transformation of the UK’s businesses, delivering up to £5 billion per year in economic benefit by 2030 and that it will deliver its own version of levelling up by creating a third operator with scale and increasing competition in the UK market.
Analysts are suggesting that this merger has a greater chance of going through than previous attempts at consolidation with James Robinson, Senior Analyst at Assembly commenting that “With the Government’s recent Wireless Infrastructure Strategy, the merger announcement, with its commitment to investment and jobs, comes at an opportune moment. Together, Three and Vodafone would be better equipped to deliver ultrafast, reliable and secure mobile connectivity throughout the UK – the exact thing the Government’s pro-investment strategy wants to see.”
Whilst Paolo Pescatore of PP Foresight said “A marriage of convenience makes sense. Scale is key to help lower costs and improve margins. It will take years before we see the real fruits of this deal come to fruition. The question is, can the UK wait that long? However, convergence still remains the achilles heel if this does get over the line. It would create a mobile champion that could increase competition in the wholesale segment of the market and become a partner of choice for MVNOs.”
Ahmed Essam, Vodafone UK Chief Executive and Robert Finnegan, CEO of Three UK delivered a video statement on the plans which you can watch on the microsite.
How will the merger play out? It is sure to be a hot topic for discussion at Connected Britain this September – get your ticket today!