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Sunday, July 14, 2024

Vodafone/3 Merger Talks Confirmed: UK’s Largest Mobile Base Faces Hurdles

Following the news that Vodafone has finally confirmed that it has been in talks with CK Hutchison, owner of Three UK, to bring together their UK businesses to create the country’s largest mobile operator with about 27 million subscribers;

Emma Mohr-McClune, Service Director of Consumer at GlobalData, a data and analytics company, offers her view:

“The proposed joint venture (JV), to be owned 51 percent by Vodafone and 49 percent by CK Hutchison, would address scale problems faced by both operators, but faces significant regulatory and Government scrutiny. There are two major benefits for the prospective partners. Firstly, the combination of mobile customer bases would create significant market share, making the JV the largest mobile services provider in the UK – certainly on the business to consumer (B2C) side. The other is within 5G spectrum asset and network integration, enabling the JV to accelerate its 5G network rollout faster and at lower cost.

“Beyond spectrum assets, it is unclear how many tangible benefits Three UK would be able to bring to the proposed merger’s strategy table. It is also questionable that the ‘3’ brand profile of Three UK would be useful to the planned JV, unless it would be to keep its base of value-driven customers. The ‘3’ brand was envisaged when 3G was a futuristic concept, but it is no longer clear what that numerical brand can reflect in the era of fiber, 5G, and future 6G.”

Robert Pritchard, Senior Analyst for Enterprise Technology and Services at GlobalData, adds:

“GlobalData analysis illustrates the extent to which Vodafone and 3 have fallen behind in the market for UK mobile subscriptions.

“Any combination on this scale poses challenges in terms of combining legacy IT, organisations, networks, systems, spectrum strategies, customer support processes, partner, branding as so forth. That all comes after gaining approval from Ofcom and the Competition and Markets Authority.

“Competitors will push back against the JV and there will be regulatory hurdles, but these look jumpable. There is a growing consensus that a base of three mobile operators in a country is enough to maintain competition while enabling long-term investment in networks and innovation for the future.”


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