Vodafone confirms talks with Three UK about merger

theguardian.com:

Vodafone and the owner of Three UK are in talks about a potential mega-merger that would create Britain’s biggest mobile operator.

Vodafone and CK Hutchison, the parent company of Three UK, have long been considered potential merger candidates after a wave of consolidation in the UK and European telecoms sectors in recent years.

“Vodafone confirms that it is in discussions with CK Hutchison Holdings in relation to a possible combination of Vodafone UK and Three UK,” the company said in a statement. “The 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.”

The first admission of talks between the two companies follow the French telecoms billionaire Xavier Niel and the Swedish activist investor Cevian taking stakes in Vodafone, where shares have more than halved since 2018. Shares were up 2% on Monday.

Hong Kong-based Hutchison has been exploring a sale, having failed to grow Three UK, which launched more than two decades ago, to the scale of the biggest players Vodafone, EE and O2.

In February, Nick Read, the chief executive of Vodafone, said he had entered talks with rivals in its biggest markets to strike deals with “speed and resolve”, arguing that the European telecoms industry must consolidate to create more profitable businesses that are more attractive to investors.

Vodafone said a deal to create a new telecoms group – Vodafone UK and Three UK would be the largest mobile operator by customer numbers – is necessary given the huge costs of rolling out and maintaining new 5G networks.

“The conditions to ensure thriving competition in the market need to be nurtured, otherwise the UK is at risk of losing the