LONDON/HONG KONG, June 14 – Vodafone and CK Hutchison officially announced the merger of their British operations on Wednesday, with the goal of creating the UK’s largest mobile operator, increasing competition, and investing $14 billion in the country.
The highly anticipated announcement follows public confirmation of merger talks between the two companies in October. Vodafone will hold a 51% stake in the combined entity, while Hutchison will own 49%. Ahmed Essam, the current Vodafone UK chief, will lead the new group, and Darren Purkis, current finance chief of Three UK, will assume the same role in the merged organization.
The combined operator will serve approximately 27 million customers, surpassing BT’s EE and VM O2, which are jointly owned by Telefonica and Liberty Global. Vodafone, presently the third-largest mobile operator in the UK, and Hutchison, ranked fourth, will maintain options allowing Vodafone to acquire the Hong Kong-based conglomerate’s 49% stake in the future.
Regulators are expected to scrutinize the deal closely, as they have previously opposed transactions that reduce the number of networks in major markets from four to three.
To secure the support of politicians, unions, and the competition regulator, Vodafone and CK Hutchison have pledged to invest £11 billion ($14 billion) in the UK over the next 10 years. This investment will create “one of Europe’s most advanced standalone 5G networks,” according to the companies.
Canning Fok, co-managing director of CK Hutchison, stated that both Three UK and Vodafone UK lacked the necessary scale to earn their cost of capital independently. “Together, we will have the scale needed to deliver a best-in-class 5G network for the UK, transforming mobile services for our customers and opening up new opportunities for businesses across the length and breadth of the UK,” Fok said.
Following the merger announcement, Vodafone shares rose 3.6%, recovering from a 25-year low of 71 pence on Tuesday.
