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Vodafone in talks to merge UK arm with Three - report

Published: 09:44 12 May 2022 BST

Vodafone Group PLC - Vodafone Group PLC reportedly in talks to merge UK arm with CK Hutchison's Three

Vodafone Group PLC (LSE:VOD), the UK-based telecommunications giant, is holding talks to merge its UK operations with Three UK, owned by Hong Kong-based CK Hutchison Holdings, according to a news report.

Cevian Capital, one of Europe's biggest activist funds, has been pressuring Vodafone to better orient its portfolio towards key markets in order to increase returns, the Financial Times reported.

The exact structure under discussion could not be ascertained, it added.

A combination of Vodafone and Three would likely lead to regulatory scrutiny, as it would bring together the third and fourth-largest mobile companies in the UK and reduce the number of big operators from four to three.

READ: Vodafone eyes Indus stake sale as Indian exit continues

Looking to trim the FTSE 100 group's massive debt pile, Nick Read, Vodafone's chief executive, told investors in February that the company is seeking deals with peers in multiple European markets. 

Reports in recent months have also suggested Vodafone was among companies tentatively approaching TalkTalk about a deal and expressed an interest in Three late last year without reaching an agreement. 

READ: Vodafone approached over Italian business - report

Talks were said to be on hold while CK Hutchison divested its UK towers business.

CK Hutchinson and Vodafone have partnered in markets like Australia, and speculation about a deal has been rife for years.

In a statement today, Vodafone announced that Informa PLC (LSE:INF) chief executive Stephen Carter will be joining the telecoms company as a non-executive director following the AGM on 26 July. Carter served as the first CEO of telecoms regulator Ofcom.

Vodafone chairman Jean-Francois van Boxmeer said Carter "brings a track record of value creation and he has extensive commercial and regulatory experience in the telecoms and media sectors".

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