Vodafone has agreed to merge its UK operations with Three-owner CK Hutchison.
The much-anticipated deal would create the UK’s largest mobile phone operator.
Vodafone will own 51 per cent of the combined group, which would have around 27 million customers. Virgin Media O2 has around 24 million customers while the BT-owned EE has 20 million.
Analyst Paolo Pescatore from PP Foresight said the parties will need to convince the Competition and Markets Authority, which has already confirmed it will examine the deal.
“A marriage of convenience makes sense. Scale is key to help lower costs and improve margins. It will take years before we see the real fruits of this deal come to fruition. The question is, can the UK wait that long? However, convergence still remains the Achilles heel if this does get over the line. It would create a mobile champion that could increase competition in the wholesale segment of the market and become a partner of choice for MVNOs.”
Mr Pescatore continued: “Both parties need to demonstrate that this is genuinely in the interest of UK plc, the economy, and consumers for it to have a chance of getting over the line.”
