By Paul Sandle and Clare Jim
LONDON/HONG KONG (Reuters) -Vodafone and CK Hutchison finally unveiled the merger of their British operations on Wednesday, pledging to create the country’s largest mobile operator to boost competition and invest $14 billion in the country.
The details came in a long-awaited announcement after the two companies publicly revealed they were in talks in October.
Vodafone will own 51% and Hutchison 49% of the combined group, which will be led by current Vodafone UK boss Ahmed Essam, the companies said. Current Three UK finance chief Darren Purkis will take the same role in the new group.
The combined operator will have about 27 million customers, overtaking BT’s EE and VM O2, jointly owned by Telefonica and Liberty Global.
Vodafone, which is currently Britain’s third-biggest mobile operator, and fourth-placed Hutchison will have options which would allow Vodafone to acquire the Hong Kong-based conglomerate’s 49% stake in the future.
The deal will face intense scrutiny from regulators who have previously opposed deals that reduce the number of networks in major markets from four to three.
Seeking to win the support of politicians, unions and the competition regulator, the two groups said they would invest 11 billion pounds ($14 billion) in Britain over 10 years to create what they described as “one of Europe’s most advanced standalone 5G networks”.
CK Hutchison co-managing director Canning Fok said Three UK and Vodafone UK lacked the scale on their own to earn their cost of capital.
“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,” he said.
Shares in Vodafone, which fell to a 25-year low of 71 pence on Tuesday, rose 3.6% after the deal was announced.
($1 = 0.7910 pounds)
(Reporting by Paul Sandle in London and Clare Jim in Hong Kong, Editing by Kate Holton)
