Vodafone to buy out CK Hutchison JV in £4.3bn deal

(Sharecast News) - Vodafone said on Tuesday that it has agreed to buy CK Hutchison's stake in mobile operator and broadband provider VodafoneThree for £4.3bn, taking full ownership of the joint venture. Currently, Vodafone has a 51% stake in the JV, while Hong Kong conglomerate CK Hutchison owns the rest.

Vodafone said it was now "even more confident" about delivering its plans to create one of Europe's leading telecoms networks, which include expecting to realise £700m annual cost and capital expenditure synergies by FY30.

"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," it said.

The company's chief executive, Margherita Della Valle said: "A year on from the merger, the team has made remarkable progress, as we maximise the full potential of VodafoneThree and capture the significant synergies.

"I'm delighted that we will now have full ownership of VodafoneThree as we roll out one of Europe's most advanced 5G networks, provide the UK's best customer experience and drive long-term value for our shareholders."

At 1020 BST, the shares were down 0.8% at 117.85p.

Dan Coatsworth, head of markets at AJ Bell, said: "The transaction signals a new lease of life for a business that was bloated with debt and struggled with low growth. That led to Vodafone selling or exiting various operations to simplify the group structure and regain focus.

"There are now tentative signs of improvement both operationally and financially, putting it in a better position to mount a comeback.

"VodafoneThree has decent scale in the UK and is enjoying good broadband growth, and Vodafone clearly sees an opportunity to accelerate growth efforts by having full control. The UK mobile and broadband market is highly competitive, and Vodafone needs to be agile to stay one step ahead."

Susannah Streeter, chief investment strategist at Wealth Club, said the move will enable Vodafone to have a tighter grip on strategy, cut costs, and potentially lay the groundwork for swifter execution of its plans.

"Given that joint ventures can slow decision-making, this should enable Vodafone to up the pace of its 5G infrastructure roll-out, improve network quality so it can compete on performance and reliability," she said. "It may also help with cross-selling its broadband offering, with bundled digital services seen as a cash cow given they generate recurring revenue, often at higher margins."

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