The boss of Vodafone has suggested that he is on the hunt for more deals despite a flagship acquisition in Germany failing to yield growth.
Nick Read, the telecom company’s chief executive, raised the prospect of a wave of UK dealmaking even as it unveiled a fall in German revenues, three years after the £18bn acquisition of assets from Liberty Global turned the European nation into its biggest market.
Mr Read, who is under pressure from an activist investor, refused to comment on reports that the FTSE 100 company is in discussions with Three about merging their UK businesses.
However, he argued that cutting the UK market from four major mobile phone operators to three would be “healthy for the sector, healthy for investment and still have good competition”.
Mr Read said: “I really can’t comment on press speculation. What I would say is that if I look at a higher level at the UK market my view is that it remains a very fragmented market which is resulting in poor returns and under investment.
“You could look at the UK and say it needs two fixed networks, which it has, and three mobile networks to give a healthier structure for investment going forward.”
In its quarterly results, Vodafone said its revenues had increased by 1.6pc to €11.3bn (£9.6bn).
Its Germany business lagged behind, with revenues falling slightly, but the UK service revenues grew by 6.5pc after increases to contract prices and a rebound in roaming revenues as holidays kicked off again following the coronavirus pandemic.
Germany slowed amid new regulations that block automatic contract renewals for phone and broadband contracts. Vodafone said it had lost 34,000 cable broadband customers and 79,000 TV customers as a result of the changes.
Any merger between Three and Vodafone would likely provoke scrutiny into whether the deal harms competition and consumers.
The combined companies would have around 27m customers in Britain and vast assets in mobile spectrum.
It would “instantly become the number one player in mobile,” analysts CCS Insight said.
Brussels previously blocked a UK merger between mobile operators Three, controlled by Hong Kong billionaire Li Ka-Shing, and Telefonica-owned O2 in 2016. However, that decision was ultimately overruled by an EU court after the deal fell apart, opening up the possibility of mergers between Britain’s biggest mobile phone companies.
Last year, a £31bn deal between Virgin Media, the cable company, and O2’s mobile arm was waved through by merger authorities. The merged company has since been exploring further deals, speaking to broadband provider TalkTalk about a possible takeover.
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