The Competition Commission has opened an investigation into the merger of Vodafone and Three in Britain, which was long anticipated. This will create Britain’s largest mobile operator.
Margherita Della Vale, Vodafone’s newly-promoted chief executive, stated that the joint venture valued at £18billion including debt and synergies would be “great” for customers, the country, and competition.
Vodafone, the third-largest operator in the country, will hold 51 percent of the combined business, while CK Hutchison (the Hong Kong conglomerate which owns Three), the fourth largest operator in the country, will have 49 percent.
The companies stated that the customers will enjoy a “better network experience” at no additional cost and plan to invest £11billion in the UK for ten years on developing the 5G networks.
The government said that it would create between 8,000-12,000 new jobs across the economy, and deliver an economic benefit of up to £5billion per year by 2030. This would help British businesses transform digitally.
Vodafone, one of the largest telecoms companies in the world, sells mobile, landline and broadband services as well as TV. However, it has struggled to grow due to its large debts. Nick Read, its chief executive announced in December that he was leaving the company after its share price had dropped by 44 percent since he assumed his position four years ago.
A spokesperson for the Competition and Markets Authority stated: “Both Vodafone and Three play a key role in the UK’s communications market. . . It’s important that the CMA examines the potential impact of this deal on the competition.”
The agreement is designed to save more than £700,000,000 in annual costs and capital expenditures by the fifth year following its completion. This is expected to happen before the end next year, subject to regulatory approval.
The London Stock Exchange closed Vodafone shares at 72 3/4p, up 1/2p.
Virgin Media O2’s spokesman stated: “Such large transactions need to be closely scrutinised to ensure that competition is not damaged and consumers are not left out.”