Vodafone completes £15bn Three mega-merger with major pledge
FTSE 100 giant Vodafone has vowed to invest as much as £1.3bn in network infrastructure over the next 12 months after completing its blockbuster £15bn merger with British rival Three.
The capex commitment is part of a pledge to invest £11bn over the next decade by the combined entity, which will be called VodafoneThree and is set to become Britain’s biggest mobile operator.
Vodafone and Chinese conglomerate CK Hutchison, which will control 51 per cent and 49 per cent of the merged business, have agreed to contribute £800m of equity into VodafoneThree to support the working capital requirements of the business.
The first £600m is set to come immediately followed by the remaining £200m to follow in the first quarter of next year.
VodafoneThree said it would use the cash to accelerate its network deployment create “one of Europe’s most advanced” 5G networks.
Vodafone deal ‘creates a new force in UK mobile’
Vodafone CEO Margherita Della Valle said: “The merger will create a new force in UK mobile, transform the country’s digital infrastructure and propel the UK to the forefront of European connectivity.
“We are now eager to kick-off our network build and rapidly bring customers greater coverage and superior network quality.”
VodafoneThree said its net debt immediately after completion is expected to be £6bn, increasing Vodafone Group’s net debt £1.7bn.
Vodafone, which swung to a loss in its latest results amid an impairment hit, said the combined entity is set to deliver £700m in cost and capex synergies per annum by the fifth year after completion.
The deal’s closure brings to an end a sweeping restructure of Vodafone’s European operations following the arrival of new CEO Della Valle in 2023, which has seen the sale of Vodafone Italty to Swisscom for €8bn, completed in January, and the £4.4bn sale of Vodafone Spain to Zegona Communications, completed in May last year.
It remains unclear whether the merged entity will adopt the branding of Vodafone or Three or opt for something new entirely.
Della Valle refused to be drawn on the subject in a press conference last month, telling reporters: “We are well-used to managing multi-brand environments.”
Vodafone’s £15bn merger plan was given regulatory clearance by the Competition and Markets Authority in December last year.
The CMA’s inquiry group chair, Stuart Mcintosh, said: “After extensive feedback, we believe the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed, but only if Vodafone and Three agree to implement our proposed measures.”
The telco’s shares have risen by around 12 per cent since the start of the year.