After months of speculation, Vodafone has confirmed its merger talks with CK Hutchison Holdings Ltd's Three UK. Prior to this combination of entities, Vodafone and Three were the third and fourth most successful companies in the UK mobile industry, in terms of subscribers. By merging together, the companies will share around 27 million customers between them, overtaking the current market leaders BT, EE and Virgin Media O2.
The merger deal will be structured using debt and will include no cash considerations. Following the merger, Vodafone will possess 51% of the ownership whilst Hutchison will own 49% of the consolidated entities. The deal is heavily centered around the promise of 5G, which will enhance the speed and efficiency of telecommunication practices. Furthermore, this move will enable the mobile giants to gain the necessary scale to become British mobile market leaders.
This strategic decision will also enable the merged forces to accelerate the roll out of 5G services and broadband availability, with a strong emphasis on ensuring accessibility for small businesses and rural communities. Prior to the consolidation, the entities were required to seek approval from the United Kingdom’s Telecom Regulatory Authorities to minimize anticompetitive and abuse of price leadership in regards to the provision of 5G data.
In order to reclaim their dominant position in the mobile network industry, O2 and EE will have to reevaluate their strategies on competitive pricing by potentially modifying existing customer deals they offer. Otherwise, they will struggle to compete with the scale and dominance of the merged forces of Vodafone and Three.
Written by Nathan Pearman
Source: Fierce Wireless
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