Vodafone dials up full control of joint venture with Three in £4.3B deal
CK Hutchison takes early cash as UK mobile tie-up moves ahead of schedule
Vodafone has struck a deal to take full ownership of VodafoneThree, the mobile network formed from last year's merger of its British operations with Three, in a move designed to accelerate its UK ambitions.
The £4.3 billion ($5.8 billion) agreement will see Vodafone Group buy out Three parent CK Hutchison Group's 49 percent minority stake, pending regulatory approval, in the second half of 2026.
The move came sooner than most industry watchers expected as the merger only completed last June, and the original terms gave Vodafone the right to bid for CK Hutchison's stake after three years. Market intelligence firm Megabuyte values VodafoneThree at £13.85 billion under the deal, some £2.65 billion below the original £16.5 billion threshold.
"CK Hutchison is taking a haircut in favor of early cash, but this benefits the broader group's strategy of exiting European assets," Megabuyte senior analyst Tom Oughton commented.
Assuming the agreement is cleared, it will simplify the ownership structure of the business, Oughton added, though it is not expected to have any material effect on its strategy and operational plans.
"Accelerating the ownership change is logical, with CK Hutchison deeming the UK non-core and full ownership allowing Vodafone to accelerate its UK plans (which has now become a core market following several European disposals) and arguably taking advantage of a cheaper valuation."
According to other market watchers, the move demonstrates the progress VodafoneThree has made in delivering on the network obligations attached to last year's merger approval.
CCS Insight director for consumer and connectivity Kester Mann, said it "reinforces a wide-held industry view that the Vodafone brands will eventually prevail over the Three brands."
PP Foresight founder and analyst Paolo Pescatore told The Register: "Integration is ahead of plan, network performance is improving, and customer service is being taken to a whole new level."
"It should lead to better service for customers and the acceleration of new services, rather than requiring approval or having all stakeholders on board."
The merger was originally driven by Vodafone and Three's shared struggle to compete as Britain's third and fourth-largest mobile operators against BT/EE and Virgin Media O2. Combining them reshaped the market into three dominant players.
The tie-up has not been without controversy. Staff were told last October that UK roles may be offshored to India under new contracts with Ericsson and Nokia.
Around the same time, Vodafone and Three announced mid-contract price hikes for customers, in defiance of guidance laid out by regulator Ofcom. But in this instance, it was following VMO2 and BT, which had also exploited a loophole in the rules that were intended to end unpredictable mid-contract increases.
VodafoneThree CEO Max Taylor said today: "Vodafone's decision to take full ownership of VodafoneThree is a clear vote of confidence in our business, and the fast start we've made in creating one integrated team and delivering early benefits for our customers."
The telco will host an investor event in the UK later this year to provide greater detail on its priorities and future growth ambitions. ®