Vodafone and Three UK locked in new merger talks

Both MNOs have publicly stated in the past an interest in consolidation 

Vodafone Group is reportedly in talks over a merger deal with its domestic rival Three UK.

These talks were first reported by the Financial Times, citing people with direct knowledge of the matter.

Both Vodafone and Three UK have declined to comment when contacted by Mobile News on the subject.

Three UK is owned by Hong Kong-based CK Hutchison Holdings and has previously been linked with a merger deal with O2 in the past, before O2 merged with Virgin Media last year.

Meanwhile Vodafone has recently faced pressure from Europe’s largest activist fund Cevian Capital to simplify its portfolio.

And Vodafone’s chief executive Nick Read called for the consolidation of European telecoms as recently as February of this year.

Compete 

CCS Insight director for consumer and connectivity Kester Mann says the deal is a necessary one, in order to compete with BT and Virgin Media O2.

“Confirmation of talks between Vodafone and Three in the UK would come as no surprise,” said Mann.

“Three has talked up consolidation for years; Vodafone is under shareholder pressure to strike deals. Both need greater scale to compete with BT and Virgin Media O2 in the competitive UK market.

“A few years ago, a tie-up between Vodafone and Three would have felt like a unnatural pairing. But in recent times, Vodafone has taken on more of a challenger role, notably evidenced by its launch of speed-tiered unlimited data tariffs. Three’s traditional focus is on market disruption and providing value for money, so their cultures may not now be too far apart.”