Vodafone Targets U.K. Merger Clearance With Virgin Media Pact
By Adam Whittaker
Vodafone agreed to extend a network sharing pact with Virgin Media O2 and sell spectrum to it, paving the way for regulatory approval of Vodafone's U.K. merger with Three U.K.
The London-listed telecom company said Wednesday that a newly created company from its U.K. merger with Three--known as MergeCo--will sell spectrum to Virgin Media O2 upon completion at market value, creating a third mobile network in the country.
"The proposed merger, together with this agreement, will boost competition by establishing a strong third player in the U.K. mobile market and will improve the balance of spectrum holdings, leveling the playing field between the U.K.'s mobile operators," Vodafone European Markets Chief Executive Ahmed Essam said.
Last year, Vodafone and CK Hutchison Holdings--owner of Three--agreed to merge their U.K. operations in a deal valuing MergeCo at more than 7 billion pounds ($8.88 billion). Vodafone would own 51% of the combined business with Hong Kong-listed CK Hutchinson owning the rest.
However, the deal has been under scrutiny from the U.K. Competition and Markets Authority as it believed the merger would reduce competition, lead to higher prices and impact investment in U.K. mobile networks, leaving consumers and businesses worse off.
It has set a deadline of Oct. 12 for its in-depth investigation into the deal.
"We believe that this new agreement addresses the issues we have voiced and the CMA outlined in its initial decision, and will now continue our engagement with the regulator in this spirit," Virgin Media O2 CEO Lutz Schueler said.
In May the U.K. government approved the joint venture with a number of conditions that it said were needed to safeguard networks and data in the interests of national security.
Vodafone shares at 0902 GMT were unchanged at 68.96 pence. They are up 0.6% over the year to date.
Write to Adam Whittaker at adam.whittaker@wsj.com
(END) Dow Jones Newswires
July 03, 2024 05:38 ET (09:38 GMT)
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