Li Ka-shing’s Three UK to merge with Vodafone unit to form Britain’s biggest mobile provider worth US$15.7 billion
- Vodafone will own 51 per cent of the joint venture, with no cash consideration being paid as part of the transaction
- Transaction marks latest telecoms deal as part of CK Hutchison’s ‘asset-light’ strategy
The long-gestating deal that has involved more than a year of talks will see Vodafone own 51 per cent of the combined company, with no cash consideration being paid.
Instead, the joint venture will take on £6 billion in debt, with Vodafone taking on £4.3 billion and Three UK accounting for the remaining £1.7 billion. Upon closing, £1.68 billion of debt owed by Three UK to CK Hutchison will be repaid in cash.
“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,” she said.
The transaction will combine the third and fourth largest mobile providers in Britain, which is expected to trigger significant scrutiny by UK competition authorities.
The companies have struggled to compete with their larger rivals BT Group and Virgin Media O2, a joint venture between Liberty Global and Spain’s Telefonica.
CK Hutchison to form new Italian telecoms company with Sweden’s EQT
Liberty Global and Telefonica agreed to combine their UK telecoms arms – Virgin Media and O2 respectively – in a 50-50 joint venture in May 2020, with British competition authorities signing off on the deal a year later.
The Vodafone UK-Three UK transaction is expected to close before the end of next year, subject to regulatory and shareholder approval.
Following the deal, the joint venture will invest £11 billion in the next decade to build out its stand-alone 5G network. The companies also said they expected to offer mobile home broadband to 82 per cent of British households by 2030.
Li Ka-shing flagship firms post profit rise, showcase strength of diverse portfolio
“For Vodafone, this transaction is a game changer in our home market,” Vodafone CEO Margherita Della Valle said. “This is a vote of confidence in the UK and its ambitions to be a centre for future technology.”
The joint venture with Vodafone marks the latest move by CK Hutchison, whose businesses includes port operations, infrastructure, retail and telecommunications, to reshape its mobile businesses around the world through an “asset-light” strategy.
CK Hutchison also said in March that it was in active discussions regarding potential deals involving its businesses in Denmark and Sweden, with the Financial Times reporting it was in talks with Scandinavian telecommunications company Telenor.