Vodafone and Three faced months of skepticism after first announcing their intentions to merge in 2023. Regulators had good reasons to worry, one being that they’d stomp out competition. Earlier in 2015, Three tried to fuse with O2, but the European Commission shut it down, claiming it would squeeze customers and raise prices.
This time, they’ve managed to charm the UK’s Competition and Markets Authority (CMA) with the promise of spending billions on a new 5G network and agreeing to keep prices in check.
Vodafone-Three Join Forces and will lead 5G in the UK
Three and Vodafone will officially become one in the first half of 2025. By then, they should be the largest mobile operator in the UK by customer numbers, surpassing the likes of BT Group’s EE and Virgin Media O2. The consolidation is worth about £16.5 billion, or $21 billion, and together, the companies serve 27 million customers.
Vodafone will own the majority share at 51%. After three years, and if certain conditions are met, Vodafone has the option to buy the remaining 49% stake from Three’s company, Hutchison, through a Put and Call option. A Put and Call option is a financial agreement where one party (in this case, Vodafone) has the right to buy (Call option) or sell (Put option) an asset at a specific price within a time frame.
Today’s decision creates a new force in the UK’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves.
Consumers and businesses will enjoy wider coverage, faster speeds and better-quality connections across the UK, as we build the biggest and best network in our home market.
Today’s approval releases the handbrake on the UK’s telecoms industry, and the increased investment will power the UK to the forefront of European telecommunications.
Margherita Della Valle, CEO at Vodafone Group
Although they claim that this new development will create thousands of jobs, past examples in the telecom industry tell a different story. Usually, when companies join forces, they combine similar departments. Because what’s the point of having two of the same thing? Customer service, IT, and marketing, among other departments will experience redundancies where roles overlap, resulting in layoffs.
One example is when Orange and T-Mobile merged to form EE in 2010, with the same promises of new job opportunities. But EE later cut 1,200 jobs in the months following the merger, saying that they needed a more streamlined operation. Another instance is the consolidation of Virgin Media and O2 in 2021, where there were 1,000 job cuts.
Merger is poised to drive the future of connected devices
Vodafone-Three’s merger highlights a growing trend in the telecommunications industry where companies are under pressure to stand out from the competition. To do this, they are focusing more on improving customer experiences through offering mobile plans, flexible contracts, and integrated services.
A major part of this shift is the focus on next-generation 5G and 6G technologies. Operators are already investing in building strong, competitive networks to keep up with the increasing demand for faster, more reliable connections. As they continue to build these technologies, they’re also expanding into IoT, smart homes, and business services.
The rise in connected devices is expected to hit 32 billion by 2030, and a big driver of it is the growth of Internet of Things (IoT). By the looks of it, Vodafone and Three are now stronger than ever to handle this surge.
