Vodafone-Three merger set to be finalized in weeks

A merger of Vodafone with its rival Three is set to be finalised within weeks, The Mail on Sunday understands, in a deal that will change the landscape of Britain’s mobile phone market.

Talks between FTSE 100 giant Vodafone and Three’s owner, CK Hutchison – led by Hong Kong tycoon Li Ka-Shing – have been going on for more than six months. A deal would see Vodafone, the UK’s third biggest mobile network, join forces with the number four player.

Last month, Three’s finance boss, Darren Purkis, said discussions were ‘moving in the right direction’, sparking speculation a formal announcement could be made by the end of April. Vodafone is still on the hunt for a permanent chief executive, following the ousting of Nick Read at the end of last year.

Margherita Della Valle, the firm’s chief financial officer, took over as interim boss. She promised to ‘do better’ and revive Vodafone’s flagging share price, which has fallen 30 per cent over the past 12 months. Some in the industry fear she will not be able to provide a decisive change in direction, given her long history at the business.

But a City source lambasted Jean-François van Boxmeer, former chief executive of Heineken, who has chaired Vodafone since November 2020. He has been branded ‘incredibly conservative’ and accused of being behind ‘a lot of the problems at Vodafone’.

The source also pointed to a ‘very arrogant conglomerate attitude’ at the company.

‘A lot of people at the top of Vodafone are invested in keeping the group alive,’ the source added.

‘Once you start divesting businesses and saying they can perform better alone, questions will start being asked like, ‘What is the point of Vodafone?’ and then they are out of a job.’

Sticking points for the merger are thought to include separate network sharing agreements, as well as having to disentangle Vodafone UK’s connections with its parent group.

But Three is likely to be more set on a deal than ever after its chief executive, Robert Finnegan, admitted that the company’s investment plans for its network would become unsustainable if a deal was not agreed. This is Money