The UK chief executive of Vodafone has warned that investment in digital infrastructure will be cut and it will be unable to deliver on the government’s goals if it is prevented from merging with Three.
The Times reported Ahmed Essam said the business was not making the returns needed to cover its cost of capital and without the deal “we won’t be able to invest as much and we won’t be able to deliver the 5G ambition that’s coming in the wireless infrastructure strategy from the government. It will just slow us down.”
Last month Vodafone and CK Hutchison, the owner of Three, announced plans to merge and create Britain’s biggest mobile operator, with Vodafone owning 51% of the business and Hutchison the rest.
They said there would be up to a sixfold increase in average data speeds by 2034 and the combined business would invest £11bn in the UK over ten years to build one of Europe’s best 5G networks.
Essam described the present Vodafone and Three businesses as “subscale” compared with the “large competitors” of BT and Virgin Media 02. “The UK doesn’t rank well in terms of 5G across Europe, and I think this deal brings the scale to invest in 5G. We will become a much more effective competitor to BT and VM02,” he said.