Analysts Offer Premium Valuation To Vodafone-Three UK Merger, Subject To Regulatory Approval

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  • Vodafone Group Plc VOD and CK Hutchison Holdings Ltd's CKHUF potential U.K. merger would create a wireless giant worth about €16.5 billion (£14.3 billion), analysts said.
  • The deal would involve combining Vodafone UK and Three UK, with Vodafone holding 51% and CK Hutchison owning 49% of the new unit likely to bring in more mobile revenue than its main rivals
  • Vodafone U.K. carries an enterprise value of €9.8 billion, and Three U.K. is worth €4.4 billion, while bringing them together would yield some £2 billion ($2.3 billion) in synergies, Bloomberg reports citing New Street Research analysts. 
  • Also Read: Private Equity Firms Are Flocking To Vodafone's Tower Unit, Valued In The Billions
  • Analysts at Oddo BHF SCA put the joint enterprise value at £14.5 billion, the report added.
  • But Oddo set the deal's chances of success at just 55%, given strict regulatory scrutiny. The units could divest tower stakes or spectrum as potential remedies.
  • New Street said a deal could take more than a year to complete, but it had a "far better" chance of being approved.
  • New Street said the main benefit would be combining the two networks of radio antennas. However, this could take a while because long-term contracts with tower companies and other operators bound the companies.
  • The U.K. Government rightly sees 5G as transformational for the economy and society and critical to the country becoming more competitive in an increasingly digital world. 
  • Price Action: VOD shares traded higher by 2.02% at $12.10 in the premarket on the last check Tuesday.
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