Vodafone chief: Mobile sector’s ripe for mergers

VODaFOne’S chief executive has said the mobile phone industry is ripe for ‘consolidation’ as rumours swirl about a merger with rival Three.

nick read said the market for mobile phone networks in Britain was ‘very fragmented’, resulting in ‘poor returns and under-investment’ compared to what was needed for the country to be globally competitive.

Britain has four main networks – Vodafone, O2, BT’s ee and Three – that provide mobile phone service across the country. all other providers piggyback off these networks for their signal.

But industry executives have argued that having four networks has meant operators are continually having to push down prices due to fierce competition, depriving them of the funds needed to invest in the Uk’s digital infrastructure such as 5G and fibre broadband.

‘There’s room for consolidation in the Uk I think it would be healthy for the sector, healthy for investment and we would still have healthy competition,’ read said.

The comments will fuel speculation that Vodafone is plotting a merger deal with Three after discussions between the two were reported earlier this month. City sources previously said a deal would see the creation of a joint venture between Vodafone and Three Uk’s Hong kong owner, Ck Hutchison. an announcement was due at Vodafone’s full-year results in May but the process has been delayed.

The tie-up would reduce the number of mobile network operators in the Uk from four to three, a scenario read said would provide a ‘ healthier structure for investment’ in the network.

Vodafone, meanwhile, reported 2.7pc revenue growth to £9.6bn in the three months to the end of June as price rises and more customers in the Uk helped offset a decline in Germany, its largest market, following the introduction of a telecoms law in December.

Vodafone shares closed flat at 129.02p last night.

‘Vodafone’s latest trading update lacked the hoped-for major acquisition which could have really moved the dial,’ said aJ Bell investment director russ Mould.

He added the company’s share price continued to act like a ‘ beached whale’, with the stock having lost nearly 42pc of its value over the last five years.