{"id":31120,"date":"2025-01-16T13:43:04","date_gmt":"2025-01-16T13:43:04","guid":{"rendered":"https:\/\/peraltafinancing.com\/5g-technology\/vodafone-confirms-merger-talks-with-three-uk-in-a-no-cash-deal-to-scale-up-in-5g\/"},"modified":"2025-01-16T13:43:04","modified_gmt":"2025-01-16T13:43:04","slug":"vodafone-confirms-merger-talks-with-three-uk-in-a-no-cash-deal-to-scale-up-in-5g","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=31120","title":{"rendered":"Vodafone confirms merger talks with Three UK in a ‘no cash’ deal to scale up in 5G"},"content":{"rendered":"


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Another major piece of mobile M&A appears to be in the works in the U.K. Today, Vodafone confirmed that it was in merger discussions with Three UK, a carrier owned by CK Hutchison, to accelerate their 5G rollout. A deal would not involve any cash consideration, Vodafone said.<\/p>\n

\u201cThe envisaged transaction would involve both companies combining their UK businesses, with Vodafone owning 51% and our partner CK Hutchison owning 49% of the combined business,\u201d it wrote in its official statement<\/a> to the market published earlier today. The statement itself was made in response to press speculation around a possible deal, Vodafone noted. It described the combination as a \u201cno cash\u201d deal \u2014 that is, no actual price tag, or deal valuation, or other financial consideration paid as there might be with an acquisition.<\/p>\n

Vodafone is traded publicly in the U.K., and its market cap is currently around \u00a328.7 billion, or $32.2 billion at today\u2019s rates. CK Hutchison has a market cap of about $21 billion<\/a> (but that also controls other assets).<\/p>\n

The story of mobile carriers in the U.K. has been one of saga-style soap opera proportions. Three had a major attempt at a merger in its past, a \u00a310.25 billion deal for rival carrier O2<\/a>. That deal however was blocked by regulators in 2016<\/a>, only for regulators, four years later in 2020, to overturn that decision<\/a>.<\/p>\n

O2 by that point had moved on to a different combination: It had merged with Virgin Media\/Virgin Mobile<\/a>\u00a0(which itself had been acquired and merged by Liberty Media with its older pay-TV assets) in a $39 billion deal. Meanwhile, EE \u2014 itself a merger of T-Mobile and France Telecom\u2019s acquired and then spun out again Orange \u2014 was snapped up by BT (which used to own O2, then spun it out, and then also had reported designs to buy it back) in a $19 billion deal<\/a>. (Three also made some smaller deals in the interim, such as this one for $373 million<\/a> for UK Broadband to gain more mobile spectrum.)<\/p>\n

Vodafone was always an arm\u2019s length from all those scraps.<\/p>\n

Arguably, part of the reason why was that it was the market leader in Europe overall, and specifically the U.K. Those different M&A moves, however, did have the effect of helping those other carriers get more scale, thus putting more pressure on the market leader.<\/p>\n

Now Vodafone needs Three\u2019s scale to compete, and Three needs Vodafone. Or at least that is likely what they will argue if they do move into a formal process and the deal comes up for regulatory clearance. That overturned merger ruling in Three\u2019s past didn\u2019t lead to Three getting together with O2, but in the end it might still prove useful, by laying the groundwork for approving any subsequent big mergers that Three attempts, such as this one now with Vodafone.<\/p>\n

The big takeaway from all of the above is that mobile carriers are always aiming for more scale \u2014 critical to the economics of the capital-intensive, infrastructure-intensive carrier business model, but these days all the more important because of the data and customer ownership that this scale brings carriers, and because of there are fewer routes for carriers monetizing users, given how much content and services have decoupled from customers\u2019 carrier relationships.<\/p>\n

The issue of scale is also at the heart of this latest deal.<\/p>\n

Vodafone is playing its merger card very<\/em> carefully here. It notes that the deal would be made to speed up 5G rollout through a larger single network, specifically that it would make such a rollout more financially viable \u2014 using a statement from the government itself about the two carriers to back up its assertion.<\/p>\n

\u201cThe UK Government rightly sees 5G as transformational for the economy and society and critical to the UK becoming more competitive in an increasingly digital world,\u201d it notes, but, \u201cas Ofcom has identified, some operators in the UK \u2013 Vodafone UK and Three UK \u2013 lack the necessary scale to earn their cost of capital.\u00a0<\/span>By combining our businesses, Vodafone UK and Three UK will gain the necessary scale to be able to accelerate the rollout of full 5G in the UK and expand broadband connectivity to rural communities and small businesses.\u201d<\/p>\n

This is just step one in the process, which may or may not ever end up in a deal; Vodafone said that it and Three would be making more statements as and when talks progress, so watch this space.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"

Another major piece of mobile M&A appears to be in the works in the U.K. Today, Vodafone confirmed that it was in merger discussions with Three UK, a carrier owned by CK Hutchison, to accelerate their 5G rollout. A deal would not involve any cash consideration, Vodafone said. \u201cThe envisaged transaction would involve both companies […]<\/p>\n","protected":false},"author":1,"featured_media":31121,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12020],"tags":[12544,2475,19735,10465,20976,18833,2398,11119,20977,20978,13585],"dealstore":[],"offerexpiration":[],"class_list":["post-31120","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-5g-technology","tag-5g","tag-cash","tag-confirms","tag-deal","tag-ma","tag-merger","tag-scale","tag-talks","tag-three","tag-three-uk","tag-vodafone"],"yoast_head":"\nVodafone confirms merger talks with Three UK in a 'no cash' deal to scale up in 5G - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=31120\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vodafone confirms merger talks with Three UK in a 'no cash' deal to scale up in 5G - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Another major piece of mobile M&A appears to be in the works in the U.K. Today, Vodafone confirmed that it was in merger discussions with Three UK, a carrier owned by CK Hutchison, to accelerate their 5G rollout. 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