CK Hutchison in deal talks with Telenor in Denmark and Sweden
CK Hutchison is in talks with Scandinavian telecoms group Telenor about merging their businesses in Denmark and Sweden, as the Hong Kong-listed group seeks to drive a wave of consolidation across European telecoms.
The conglomerate, which owns Three’s operations in the UK, Ireland and other European countries, said on Thursday it had been in active discussions about potential mergers for its businesses in Denmark and Sweden, as it pursued an “asset-light” strategy.
Two people familiar with the matter told the Financial Times that CK Hutchison has been in talks with Telenor, a Norway-based telecoms company, about a potential deal to combine their Danish and Swedish telecoms operations.
Telenor Denmark is the second-biggest mobile and fixed broadband operator in the country while Telenor Sweden is the third largest in the nation, according to the company.
Discussions have also been held between CK Hutchison and other Nordic partners, according to people familiar with the matter, who added that discussions were in their early stages and no final decision had been made.
CK Hutchison did not immediately reply to a request for comment while Telenor declined to comment.
CK Hutchison on Thursday also said it was close to securing a tie-up deal between Three UK and Vodafone, which would create Britain’s biggest mobile operator.
Canning Fok, the group’s co-managing director, said CK Hutchison had been “in full force discussions” with Vodafone. Three and Vodafone will “finalise whatever necessary so that we can come to a conclusion,” he said.
“I hope that will come sooner, quite soon . . . [which] will enable us to really be able to compete much better against the big players in the UK market,” he said at a press conference for the company’s annual results.
Vodafone UK and Three UK are currently Britain’s third and fourth-largest mobile operators. Under the proposed terms of the merger, Vodafone would own 51 per cent of the combined business and CK Hutchison 49 per cent.
Both of the companies, which have suffered from weak returns over the past few years, have long argued that consolidation was necessary to allow them to generate enough profits to keep investing in their networks.
CK Hutchison’s Fok also believes they are “in a good position to get approval” from the UK’s Competition and Markets Authority, although others have cautioned there is likely to be close scrutiny of any deal.
Regulators across Europe have for decades been wary of mergers that would reduce the number of participants in a country’s telecoms market from four to three, arguing that it could cause prices to rise and harm consumers. The CMA blocked an attempted merger between Three UK and mobile operator O2 in 2016.
However, executives across the continent are hopeful that the regulatory winds are shifting as governments become more aware of the huge investments needed to secure upgrades to critical infrastructure. A proposed merger between Orange and MasMovil in Spain, being reviewed by the regulator, is seen as a litmus test for the industry.
Analysts have argued that getting the proposed Vodafone-Three UK tie-up past the British regulator is likely to be extra tough this year given the political backlash to operators’ decision to increase prices for consumers significantly above inflation in April of this year.
Three UK’s active customer base rose 6 per cent year on year in 2022 owing to “notable contract customer growth”, the company said, as it continued to roll out its 5G network across the country. However, the telecoms company reported negative cash flow, with costs exceeding earnings.
Darren Purkis, chief financial officer of Three UK, told the FT that “structural change is needed” in the UK market, noting that the company was having to borrow from its parent group to cover costs, which is “unsustainable”. Financial Times
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