VodafoneThree is currently owned 51% by Britain’s Vodafone Group, which has agreed to buy the stake for 4.3 billion pounds (US$5.8 billion), and 49% by Hong Kong-based conglomerate CK Hutchison Group Telecom Holdings, the companies said on Tuesday.
Shares of CK Hutchison were up more than 4%, hitting their highest level in over six years, while Vodafone stock rose 2% to the highest since August 2022.
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Billionaire Li Ka Shing in 2018. Photo by Reuters |
The joint venture combined Vodafone’s British unit with Hutchison’s Three, leapfrogging rivals BT’s EE and O2, owned by Telefonica and Liberty Global, to become market leader.
‘Right time’ is sooner than expected
Vodafone had an option to take full ownership three years after completion, but the deal has come sooner than expected.
“We believe now is the right time to take full ownership of VodafoneThree, enabling us to move at an even faster pace to transform the UK’s digital infrastructure and realise value for our shareholders,” Chief Executive Margherita Della Valle said.
Analysts at Barclays said the deal was earlier than anticipated but the price was attractive. Share buybacks would pause, they noted, but overall they viewed it positively.
VodafoneThree is investing 11 billion pounds in its network and is aiming to make 700 million pounds in savings by fiscal 2030.
Max Taylor will continue to lead VodafoneThree, Vodafone said, and there will be no change to its brands, which include Vodafone and Three.
The deal is the latest step in Della Valle’s strategy to focus on Vodafone’s biggest markets, led by Britain and Germany.
She has exited Spain and Italy and agreed in February to sell its 50% stake in Dutch joint venture VodafoneZiggo to Liberty Global for 1 billion euros (US$1.2 billion) and a 10% stake in a new entity.
Vodafone’s stock has risen 42% since she took over three years ago.
The deal will increase Vodafone’s net debt ratio by 0.4 times to around 2.6 times before the VodafoneZiggo contribution, although the group is targeting the bottom half of a 2.25-2.75 range.
Attractive valuation
CK Hutchison, controlled by Hong Kong’s top billionaire, said the transaction would allow it to monetize its investment at an attractive valuation and generate substantial cash proceeds.
The conglomerate continues to operate telecom businesses in Italy, Sweden, Denmark, Austria and Ireland, according to its website, and it holds a controlling stake in Hutchison Telecommunications Hong Kong Holdings, which provides services in Hong Kong and Macau.
Reuters reported in January that it was weighing listing its global telecoms business in London and Hong Kong as early as the third quarter after spinning it off, citing sources with direct knowledge of the matter.
The deal is subject to UK National Security and Investment Act approval and is expected to be completed in the second half of 2026.
