Telecom operator Vodafone has confirmed that it is in merger talks with Three UK's parent company CK Hutchison. Before that, Vodafone complained about the high cost of running a mobile network. In July this year, Vodafone CEO Nick Read said a reduction in the UK's mobile network would make the industry healthier.
Regarding the talks, Vodafone said, "In the envisaged transaction, the two companies would combine their UK operations, with Vodafone owning 51% and partner CK Hutchison owning 49% of the combined business."
The combination of Vodafone and Three UK will be the third gigantic deal merger the UK has seen in the past decade. Previously T-Mobile and Orange merged to form EE. Then, a few years ago, Virgin Media and O2 merged to create Virgin Media O2. In about a decade, the UK's five major carrier networks will shrink to three.
Vodafone went on to explain its motives for pursuing the merger:
Conditions need to be nurtured to ensure a thriving market competition, or the UK risks losing its chance to be a 5G leader. As the Communications Authority points out, some of the UK’s operators Vodafone UK and Three UK lack the necessary scale to earn Take its capital cost. By combining our businesses, Vodafone UK and Three UK will gain the necessary scale to accelerate the full rollout of 5G across the UK and expand broadband connectivity to rural communities and small businesses.
As long as the two companies agree to merge, approval from the Competition and Markets Authority may be required to ensure the move is not monopolistic.
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