Vodafone and Three's UK arms locked in merger talks
- Reference: 1664802270
- News link: https://www.theregister.co.uk/2022/10/03/vodafone_uk_and_three_uk/
- Source link:
Talks between the pair are understood to be at an advanced stage and a potential agreement is intended to be reached before the year end, though approval by shareholders and regulators will come into play.
"Vodafone confirms that it is in discussions with CK Hutchison Holdings Limited ("CK Hutchison") in relation to a possible combination of Vodafone UK and Three UK," a spokesperson told The Register via email.
[1]
The consolidation of the two entities would see Vodafone owning 51 percent of the combined entity and and CK Hutchison the remainder.
[2]
[3]
"The relative ownership would be achieved through a differential leverage contribution at closing, and no cash consideration will be paid," the telco added via its statement.
Vodafone directed us to a paper published by national communications regulator Ofcom in February in which it said some local operators lack the scale to earn their cost of capital.
[4]
"By combining our businesses, Vodafone UK and Three UK will gain the necessary scale to accelerate the rollout of full 5G in the UK and expand broadband connectivity to rural communities and small businesses."
[5]European carriers again call for Big Tech to fund network builds
[6]NTT Docomo claims first 5G network with both sub-6 GHz and mmWave
[7]Revealed: US telcos admit to storing, handing over location data
[8]Massive telecom outage in Japan kicks 40 million mobile users offline
"The merged business would challenge the two already consolidated players for all UK customers ands bring benefits through competitively priced access to third reliable, high quality, and secure 5G network throughout the UK," Vodafone added in its statement.
According to [9]Sky News , CK Hutchison has explored the sale of Three UK for some time, believing that its nine million local customers mean that it is sub-scale in a market requiring meaty cash investments developing network infrastructure.
The combined entity would have circa 27 million customer connections in Britain and control around 46 percent of all mobile spectrum. This compares to Virgin Media O2's 24 million connections and 20 million at EE.
Paolo Pescatore, tech, media and telco analyst at PP Foresight, told us: "Ultimately scale is key and with this in mind a move to merge could make sense. This will be subject to regulatory scrutiny and concessions will need to be made to get this over the line.
[10]
"If this were to happen, considering a move to integrate TalkTalk could strengthen their overall position. The company has a reasonable fixed line base and has now returned to offer TV services. Despite previous failed attempts, both need to do more to sway customers to sign up to both mobile and fixed services.
"However, Vodafone will need to move quickly to avoid losing further ground in the UK and as it has done in other European markets."
Kester Mann, analyst at CCS Insight, agreed:
"In telecommunications, the most successful companies tend to be the largest; bulking up would offer many synergies and cost-saving opportunities. Under the status quo, it's hard to see either operator growing enough organically to get close to challenging BT and Virgin Media O2 for size in the UK.
"Should any deal materialize, regulation would be a major hurdle. It would be up to the competition authorities to decide whether reducing the number of players is for the overall good of the market. Advocates will argue it encourages investment; dissenters will claim it's a reason to push up prices." ®
Get our [11]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YzsHHeYJl46MuiDDlIZzpQAAAEk&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YzsHHeYJl46MuiDDlIZzpQAAAEk&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YzsHHeYJl46MuiDDlIZzpQAAAEk&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YzsHHeYJl46MuiDDlIZzpQAAAEk&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2022/09/27/etno_digital_infrastructure_sustainability/
[6] https://www.theregister.com/2022/09/08/ntt_docomo_5g/
[7] https://www.theregister.com/2022/09/02/us_carriers_fcc_data_report/
[8] https://www.theregister.com/2022/07/04/massive_telecom_outage_in_japan/
[9] https://news.sky.com/story/vodafone-and-three-uk-accelerate-talks-to-dial-up-merger-12711050
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YzsHHeYJl46MuiDDlIZzpQAAAEk&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[11] https://whitepapers.theregister.com/
Re: Size matters
>reception should not be a mobile provider lottery.
It isn't. At least not entirely. Ofcom have set, and the government has funded, a geographically-based minimum service provision through the shared rural network.
Annoying
I've got a really good SIM with unlimited data at a good price from Three. That will obviously change if this goes ahead.
Re: Annoying
Weirdly, I get cheaper unlimited data from Smarty (a Three-owned company) than from Three... using the same network.
Re: Annoying
Although the same company (or subsidiary) Three and Smarty are not the same - for example, Three customers probably get priority on the mast. And higher data speed for example.
Customer Service? Vodafone has heard of it. Hope the cancer doesn't spread to 3 (3 already is nasty enough)
When my mobile carrier (forgot the name now) merged with EE over a decade ago, I imagined that this meant more masts so at last I could get a mobile signal inside the local town centre supermarket. In my dreams. 'Merging' meant taking out masts until they were as sparse as before. At least nowadays I can get a signal in the local high street shops via Lebara/Vodafone, which is just a matter of luck on the mast siting.
Why do they always regurgitate this bollocks...
"cost-saving opportunities"
Opportunities meaning employees and cost saving means redundancies.
So it should read "would offer many synergies and saved wages" and fuck the people we get rid of. I must protect my emoluments.
Re: Why do they always regurgitate this bollocks...
Most of the people who knew what was going on, and were actually good at what they did, have long since gone after successive outsourcing deals and seagull management.
The cost savings will be for Hutchinson really, as 3 are haemorrhaging money. If this doesn't go through, I wouldn't be surprised if it was just wound up.
Re: Why do they always regurgitate this bollocks...
Along with the fatuous "In telecommunications, the most successful companies tend to be the largest". Since a lot of the network infrastructure has already been outsourced this doesn't matter any more. But bigger companies do tend to be able to lobby better.
Reducing the mobile to three companies would be the effective approval of a cartel. Prices will rise, service won't necessarily improve and there's no need for investment.
Given the vast amounts of money 3 have wasted over the past few years, this was hardly a surprise.
I hope Vodafone have done their due diligence....
Size matters
In the UK mobile market
I'm with 3, purely because my partner is not ...*
That way, when we go somewhere else in the UK then a better chance at least one of us will get a signal (though have been occasions when both of us have had a not spot) to keep in touch with friends and family (as unfortunately finding a working phone box to use is quite difficult now).
It's pathetic in a country the size of the UK that coverage everywhere was not mandated, reception should not be a mobile provider lottery.
With EE getting the airwave replacement contract they are essentially getting a huge market advantage in tax payer funded coverage in less economically viable areas, consolidation of some of the other providers is about the only way to stop EE becoming a de facto monopoly.
* Neither of us with EE, tempting as it is with our liking of hiking in remote parts