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Chad Bray

CK Hutchison Holdings, one of the two flagship companies of Hong Kong’s richest man, Li Ka-shing, said it would merge its British telecommunications business with Vodafone’s domestic business, creating the UK’s biggest mobile provider worth a combined £12.4 billion (US$15.7 billion).
The long-gestating deal that has involved more than a year of talks will see Vodafone own 51 per cent of the combined company, with no cash consideration being paid.
Instead, the joint venture will take on £6 billion in debt, with Vodafone taking on £4.3 billion and Three UK accounting for the remaining £1.7 billion. Upon closing, £1.68 billion of debt owed by Three UK to CK Hutchison will be repaid in cash.
“Three UK and Vodafone UK currently lack the necessary scale on their own to earn their cost of capital. This has long been a challenge for Three UK’s ability to invest and compete,” said Canning Fok, CK Hutchison’s group co-managing director, in a stock exchange filing in London.


“Together, we will have the scale needed to deliver a best-in-class 5G network for the UK, transforming mobile services for our customers and opening up new opportunities for businesses across the length and breadth of the UK,” she said.
The transaction will combine the third and fourth largest mobile providers in Britain, which is expected to trigger significant scrutiny by UK competition authorities.
The companies have struggled to compete with their larger rivals BT Group and Virgin Media O2, a joint venture between Liberty Global and Spain’s Telefonica.
The deal comes seven years after the European Commission rejected Three UK’s planned takeover of O2, citing the likelihood of higher prices for consumers and a potential negative effect on the quality of service as the number of mobile competitors was reduced. That deal would have created Britain’s largest mobile carrier.
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Liberty Global and Telefonica agreed to combine their UK telecoms arms – Virgin Media and O2 respectively – in a 50-50 joint venture in May 2020, with British competition authorities signing off on the deal a year later.
The Vodafone UK-Three UK transaction is expected to close before the end of next year, subject to regulatory and shareholder approval.
The Unite trade union has come out against the deal, saying it will result in higher mobile phone costs for UK consumers and job losses for British workers. Vodafone announced plans in May to cut 11,000 jobs globally over the next three years.
Following the deal, the joint venture will invest £11 billion in the next decade to build out its stand-alone 5G network. The companies also said they expected to offer mobile home broadband to 82 per cent of British households by 2030.
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“For Vodafone, this transaction is a game changer in our home market,” Vodafone CEO Margherita Della Valle said. “This is a vote of confidence in the UK and its ambitions to be a centre for future technology.”
The joint venture with Vodafone marks the latest move by CK Hutchison, whose businesses includes port operations, infrastructure, retail and telecommunications, to reshape its mobile businesses around the world through an “asset-light” strategy.
In November 2020, the company agreed to sell its European wireless tower business to Spanish mobile towers operator Cellnex Telecom for €10 billion (US$10.8 billion). The company agreed in 2021 to merge its Indonesian wireless telecommunications business with the local operations of Qatar’s Ooredoo to form Indonesia’s second biggest mobile carrier.
In May, CK Hutchison said it would form a new joint venture with Swedish private-equity firm EQT to provide wholesale mobile and fixed communications services in Italy.
CK Hutchison also said in March that it was in active discussions regarding potential deals involving its businesses in Denmark and Sweden, with the Financial Times reporting it was in talks with Scandinavian telecommunications company Telenor.


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Vodafone will own 51 per cent of the joint venture, with no cash consideration being paid as part of the transaction
Transaction marks latest telecoms deal as part of CK Hutchison’s ‘asset-light’ strategy


Vodafone will own 51 per cent of the joint venture, which will combine its domestic mobile business with CK Hutchison’s Three UK operations and create Britain’s largest mobile provider in a deal worth US$15.7 billion.


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