Vodafone and Three owner ‘close to finalising deal’

Vodafone and Three-owner CK Hutchison are very close to securing an agreement to merge their UK telecom businesses, according to a report in the Financial Times.

According to the FT, citing unnamed sources, the pair are close to agreeing a £15 billion merger of Vodafone UK and Three, with the deal expected to be announced later this month. The appointment of Margherita Della Valle as permanent CEO of Vodafone appears to have oiled the wheels of the merger  after a period of uncertainty regarding who would take the helm at the telecom giant.

The combination would value the combined group at around £9 billion, according to the FT’s sources, which added to the companies’ combined £6 billion debt gives rise to the £15 billion figure.

The likelihood of the pair getting together has been widely reported in recent months, with media reports in April suggesting an agreement was imminent.

Three UK CEO Robert Finnegan had previously said that the CK Hutchison-owned business was “unsustainable” without the merger.

been looking at merger options in its core markets for some time – as it seeks to reduce its high debt pile. The merger with Three has long been touted as the most likely deal to happen first.

Della Valle was confirmed as permanent CEO a week ago – the first woman to hold this role.

She served as CFO since 2018 and took over from former CEO Nick Read on an interim basis in December.

Read departed after failing to reverse the company’s declining fortunes. Vodafone suffered a 40% decline in the value of its stock over the course of his leadership.

Vodafone, which has been hit by rising costs and which has struggled to regain momentum, announced a €1 billion cost-cutting programme in December, with job cuts in the UK, Germany and Italy following.

In addition to Three, Vodafone was recently reported to be once again in talks with French telecoms tycoon Xavier Niel’s Iliad Group about several possible combinations, including a revival of a plan to merge the pair’s businesses in Italy.