Vodafone Group PLC (LSE:VOD) has agreed to buy out its partner in VodafoneThree for £4.3 billion, taking full ownership of the UK mobile and broadband operator less than a year after the joint venture was created.
The FTSE 100 telecoms group said it will use its existing cash resources to acquire the 49% stake held by Hong Kong's CK Hutchison through a share cancellation, valuing the combined business at £13.85 billion.
The transaction is expected to increase its net debt-to-adjusted earnings ratio by 0.4 times, while generating £700 million in annual cost and capital expenditure savings by the 2030 financial year.
Completion of the deal is subject to regulatory approval under the UK National Security and Investment Act (NSI) and is expected in the second half of 2026.
VodafoneThree was formed in May 2025 through the merger of Vodafone UK and Three UK, when the pair had agreed that Vodafone would have the option to buy out Three’s stake after three years.
But today, the integration of the two businesses was said to be moving ahead of schedule, with improvements in network quality and customer retention.
"We have also seen a significant improvement in overall customer experience and loyalty across all of our brands. Most notably, Three has seen a significant improvement in customer retention, and we are already successfully cross selling a broad range of products, including home broadband and Fixed Wireless Access, to the largest UK mobile base," the company said.
Margherita Della Valle, chief executive of Vodafone, said: “A year on from the merger, the team has made remarkable progress as we maximise the full potential of VodafoneThree and capture the significant synergies.
“I’m delighted that we will now have full ownership of VodafoneThree as we roll out one of Europe’s most advanced 5G networks, provide the UK’s best customer experience and drive long-term value for our shareholders.”
Vodafone said the move to full ownership would allow it to accelerate investment in 5G infrastructure and deliver further efficiencies.
After the company and Hutchison, which owned by Hong Kong billionaire Li Ka-shing, originally agreed to merge the two UK mobile businesses, there followed a lengthy review process under the NSI and UK competition laws.
To get the deal approved by the Competition and Markets Authority, Vodafone and Three committed to invest £11 billion to improve mobile coverage over the following decade.
CK Hutchison's board described the sale as a "win-win" for the Hong Kong company as it generates cash and "crystallises solid value for the group from our investment".
Shares in Vodafone rose 1.75% in early trading, before falling in line with the wider market.
Analyst at CCS Insight said: “The deal is an endorsement of the strong start made by the merged company, notably in bringing the Vodafone and Three networks together. It also reinforces a widely held industry view that the Vodafone brands will eventually prevail over the Three brands.”
The transaction "signals a new lease of life", said analysts at AJ Bell, "for a business that was bloated with debt and struggled with low growth".
"That led to Vodafone selling or exiting various operations to simplify the group structure and regain focus.
"There are now tentative signs of improvement both operationally and financially, putting it in a better position to mount a comeback.
"VodafoneThree has decent scale in the UK and is enjoying good broadband growth, and Vodafone clearly sees an opportunity to accelerate growth efforts by having full control. The UK mobile and broadband market is highly competitive, and Vodafone needs to be agile to stay one step ahead."
** UPDATE: Adds details, share price, comment **