Britain’s Competition and Markets Authority (CMA) has given its green light for the merger between Vodafone Group (GB:VOD) and CK Hutchison’s Three UK. The acquisition will form a leading mobile operator in the UK with superior quality of 5G network. Both companies have expressed their satisfaction with the decision, which came after 18 months of in-depth review and analysis. Vodafone shares gained 0.99% as of writing.
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Based in the UK, Vodafone is a telecommunications company that provides a range of services for both fixed and mobile networks. Meanwhile, Three UK, or Hutchison 3G UK, is indirectly owned by Hong Kong-based CK Hutchison Holdings (HK:0001).
CMA Clears Path for Vodafone-Three UK Merger
With the approval, CMA has cleared the path for this merger, which was initially announced in 2023. However, the CMA has approved on the condition that both companies address the competition concerns arising from the merger. Earlier in September, the CMA had warned that the deal could lead to higher customer bills and called for changes to the proposal.
Meanwhile, Vodafone and Three have agreed to invest £11 billion in an advanced 5G network, which will cover 99% of the population and serve over 50 million customers. The CMA further stated that this investment would drive more competition in the market with giants like BT Group (GB:BT.A), and ultimately ensure better services for customers.
The merger is set to be formally completed in the first half of 2025. Upon completion, Vodafone will hold 51% of the merged entity. Additionally, Vodafone may acquire Hutchison’s 49% stake after three years of completion, subject to certain conditions.
Are Vodafone Shares a Buy?
According to TipRanks, VOD stock has a Hold rating based on 10 recommendations. It includes six Holds, three Buys, and one Sell rating. The Vodafone share price target is 87.08p, which implies an upside of 23.6% on the current trading levels. The price target has a high forecast of 140p and a low forecast of 65p.
