Vodafone Group Plc (“Vodafone”) and CK Hutchison Group Telecom Holdings Limited (“CKHGT”), a fully owned subsidiary of CK Hutchison Holdings Limited (“CK Hutchison”), announce the successful completion of the Vodafone UK and Three UK merger on Monday.
Terms of Vodafone-Three merger
The merger, which was completed on May 31, allows CKHGT to own 49 percent of the combined company, VodafoneThree, while Vodafone owns 51 percent.
In its financial results, Vodafone will fully integrate VodafoneThree. Max Taylor, who presently runs Vodafone UK, will serve as CEO. Darren Purkis of Three UK was appointed as the Chief Financial Officer.
VodafoneThree plans to invest £11 billion on 5G networks
Over the next ten years, VodafoneThree plans to invest £11 billion to build one of Europe’s most sophisticated 5G networks, providing a far better mobile experience for millions of consumers and companies nationwide.
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The combined company is expected to deliver cost and capital expenditure synergies of £700 million annually by the fifth year after completion, and the transaction is expected to be accretive to Vodafone’s Adjusted free cash flow from FY29 onwards.
Complete alignment with Vodafone’s accounting policies is ongoing, and pro forma financials will be provided in due course.
VodafoneThree plans to invest £1.3 billion in capital expenditures in its first year, which will allow the company to accelerate its network deployment.
This substantial investment in a 5G Standalone network will propel the UK’s mobile infrastructure to the forefront of European connectivity.
Importance of high quality network connectivity
High quality network connectivity is essential to many aspects of daily life, as well as to the UK’s economic growth prospects, the country’s science and technology sectors, public service improvement, and closing the digital divide nationwide.
Margherita Della Valle, Vodafone Group Chief Executive, said, “The merger will create a new force in UK mobile, transform the country’s digital infrastructure and propel the UK to the forefront of European connectivity. We are now eager to kick-off our network build and rapidly bring customers greater coverage and superior network quality. The transaction completes the reshaping of Vodafone in Europe, and following this period of transition we are now well-positioned for growth ahead.”
Canning Fok, Deputy Chairman of CK Hutchison and Executive Chairman of CKHGT, said, “As we have demonstrated in other European markets, scale enables the significant investment needed to deliver the world-beating mobile networks our customers expect, and the Vodafone and Three merger provides that scale. In addition, this transaction unlocks significant shareholder value, returning approximately £1.3 billion in net cash to the Group.”
Expected impact of Vodafone-Three UK merger
The transaction is anticipated to have a €0.4 billion increase in Adjusted EBITDAaL and a -€0.2 billion dilutive effect on Adjusted Free Cash Flow for Vodafone Group’s FY26 financials (on a proforma full year basis).
VodafoneThree’s net debt is anticipated to be £6.0 billion immediately upon completion, subject to usual closing adjustments. Three UK and Vodafone UK will each contribute £1.7 billion and £4.3 billion to the total debt. The net debt of Vodafone Group will therefore rise by £1.7 billion (€2.0 billion) when completely consolidated.
To support VodafoneThree’s working capital needs, both parents have agreed to invest £800 million in the company (£408 million from Vodafone and £392 million from CKHGT). Shortly after closing, £600 million of this capital will be contributed; the remaining £200 million will be contributed in Q1 2026.
No significant changes have been made to any of the information in the prior announcements issued on June 14, 2023, September 30, 2024, and December 9, 2024, regarding this transaction.