Vodafone strikes £4.3billion deal to take control of UK's biggest mobile operator

Vodafone has struck a £4.3billion deal to take full ownership of the UK’s biggest mobile operator a year after it was created. VodafoneThree was formed last year after the merger of Vodafone and Three in the UK. It saw Vodafone take a 51% stake in the joint venture and Hong Kong-based Three owner CK Hutchison a 49% holding. The combined entity leapfrogged rival BT’s EE and O2 , owned by Telefonica and Liberty Global, to become market leader. VodafoneThree is also one of the country’s fastest-growing broadband providers. Vodafone had an option to take full ownership three years after completion, but the deal has come sooner than expected. The companies said it values VodafoneThree at £13.85billion including debts. Bosses said they had seen a “strong start to the integration” of the merged brands, putting them on track to secure around £700million of annual cost efficiencies by 2030. Margherita Della Valle, chief executive of Vodafone Group, said: “A year on from the merger, the team has made remarkable progress as we maximise the full potential of VodafoneThree and capture the significant synergies. “I’m delighted that we will now have full ownership of VodafoneThree as we roll out one of Europe’s most advanced 5G networks, provide the UK’s best customer experience and drive long-term value for our shareholders.” The deal is subject to regulatory approval, including under the UK National Security and Investment Act, and is expected to complete in the second half of this year. Max Taylor will continue as chief executive of VodafoneThree, with the company stressing that there will be “no change” in its multi-brand strategy. Frank Sixt and Dominic Lai, CK Hutchison Group co-managing directors, said: “This transaction is a win-win for the group and for our partners. It generates substantial cash proceeds to the group and crystallises solid value for the group from our investment.” Dan Coatsworth, head of markets at broker AJ Bell, said: “The transaction signals a new lease of life for a business that was bloated with debt and struggled with low growth. That led to Vodafone selling or exiting various operations to simplify the group structure and regain focus. There are now tentative signs of improvement both operationally and financially, putting it in a better position to mount a comeback. “VodafoneThree has decent scale in the UK and is enjoying good broadband growth, and Vodafone clearly sees an opportunity to accelerate growth efforts by having full control. The UK mobile and broadband market is highly competitive, and Vodafone needs to be agile to stay one step ahead.” Susannah Streeter, chief investment strategist at investment service Wealth Club, said: “While it will cost £4.3billion to buy CK Hutchison out of its share of the venture, it has been cautiously welcomed by investors, who appear to appreciate that it will enable Vodafone to have a tighter grip on strategy, cut costs, and potentially lay the groundwork for swifter execution of its plans. “Given that joint ventures can slow decision-making, this should enable Vodafone to up the pace of its 5G infrastructure roll-out, improve network quality so it can compete on performance and reliability. It may also help with cross-selling its broadband offering, with bundled digital services seen as a cash cow given they generate recurring revenue, often at higher margins.”