Vodafone Group Public Limited Company VOD recently secured approval for a merger with Three U.K. from the Competition and Markets Authority (CMA), U.K. The merger, which went through thorough scrutiny for 18 months, is expected to be completed in the first half of 2025.

Vodafone and Hutchinson’s Three UK are two of the prominent telecom enterprises in the U.K. alongside EE and O2. Post merger, the number of mobile network operators will decline to three from four. This move can drive cost savings and boost profit for companies but concern about price hikes led the CMA to put some conditions to safeguard consumer interest.

The merger will be allowed to proceed only after the company signs legally binding commitments that include 11 billion euro investments for advanced 5G infrastructure deployments across the U.K. This will ensure network coverage for 99% of the population and benefit over 50 million people. The advanced 5G network will bring the network consistency, speed and reliability needed to address emerging advanced technology such as AI. The extensive network rollout plan to transform the U.K.'s digital infrastructure will boost competition between the operators in the long run.

To protect customers from short-term price fluctuations, the joint entity has to abide by the capping of selected mobile tariffs for a period of three years. Wholesale services should be offered to virtual network operators at pre-set prices and contract terms for three years. The telecoms regulator Ofcom will monitor the adherence to these pricing and investment commitments.

Will This Development Boost VOD’s Share Performance?

Following the merger, the joint entity will be the largest mobile network operator in the U.K., with Vodafone holding a 51% stake in the entity. This creates a robust competitor in the U.K. telecom market as the combined resources of the companies will likely improve service quality and coverage. It will strengthen Vodafone’s market position and enable it to capitalize on the growing demand for advanced telecom services.

VOD’s Stock Price Movement

The stock has gained 3.8% over the past year against the industry’s decline of 13.2%.

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Zacks Rank & Other Stocks to Consider

Vodafone currently carries a Zacks Rank #2 (Buy).

InterDigital IDCC sports a Zacks Rank #1 (Strong Buy) at present. In the last reported quarter, it delivered an earnings surprise of 114.47%. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.

Workday Inc. WDAY carries a Zacks Rank of 2 at present. In the last reported quarter, it delivered an earnings surprise of 9.88%.

WDAY is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, making it easier for organizations to provide analytical insights and decision support.

Plexus Corp. PLXS flaunts a Zacks Rank of 1 at present. It is a leading electronic contract manufacturing services provider to original equipment manufacturers in a wide range of industries. In the last reported quarter, PLXS delivered an earnings surprise of 20.92%.

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Vodafone Group PLC (VOD) : Free Stock Analysis Report

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