The UK’s third and fourth operators by market share have today announced their intention to merge. We’re talking about Vodafone and Three. The combined company would leapfrog past both EE (the current No.1) and O2 (the No.2), creating the country’s biggest operator while at the same time lowering competition, since where there were four, there will be only three.
As part of the proposed deal, Vodafone would own 51% of the combined business and CK Hutchinson Group Telecom Holdings (the owner of the Three brand) would have 49%.
Of course, as usual in these situations, wonderful things are promised for customers, in order to make everyone forget about how there will literally be less competition in the market if such a deal goes through. “Millions of customers of Vodafone UK and Three UK will enjoy a better network experience with greater coverage and reliability at no extra cost, including through certain flexible, contract-free offers with no annual price increases, and social tariffs”, the joint press release states.
The combined business is being provisionally called MergeCo (so imaginative!), and this will supposedly reach 99% of the UK population with its 5G standalone network, “delivering to customers up to a six-fold increase in average data speeds by 2034”.
MergeCo will invest £11 billion in the UK over ten years, and by having “a best-in-class 5G network in place sooner” (compared to what? isn’t mentioned), “the merger will deliver up to £5 billion per year in economic benefit by 2030”, whatever that means. Every school and hospital in the UK is promised to have access to standalone 5G by 2030, for what it’s worth.
Also by 2030, MergeCo will offer fixed wireless access to 82% of households. Current Vodafone UK CEO Ahmed Essam will become MergeCo CEO, and current Three UK CFO Darren Purkis will take the role of MergeCo CFO.
The transaction is expected to close by the end of next year, pending regulatory and shareholder approvals, the former of which could drag things along significantly.
