Market Round-Up

One of the largest UK mergers in recent history has finally received approval from the Competition and Markets Authority (CMA), allowing Vodafone and Three to create the UK’s largest mobile phone operator. The £16.5bn deal combines subscribers from two of the country’s four largest operators, creating a consumer base of approximately 27m.

Despite concerns raised by competitors over customer protection and rising bills, the CMA’s approval was largely anticipated, as speculation regarding its approval began almost a month ago. However, the CMA imposed several conditions before granting its approval, including a commitment to upgrade 5G coverage and provide short-term customer protections. Long-term requirements include £11bn in investments to upgrade the combined network and maintain existing data plans for at least three years.

The merger is expected to formally close in the first half of 2025, with Vodafone owning 51% of the new entity and CK Hutchison, the parent company of Three, getting the remaining 49%.

This merger could significantly impact Vodafone’s future performance. Its shares have lost nearly 50% of their value over the past five years, with a compounded annual decline of -3.8% in sales, and they have yet to recover. However, Vodafone currently offers an attractive dividend yield of 7.9% and trades at a relatively low price-to-earnings ratio of 8.9x, compared to its global competitors. On the profitability side, Vodafone’s gross profit margin has gradually improved, rising in the past five years from 26.2% in March 2019 to 33.4% in March 2024. With the opportunities presented by this merger, the company could sustain this upward trajectory.

Bitcoin continues its remarkable jump, trading at £81,160 as of the morning of December 5th, 2024. The price of Bitcoin is up 53.51% since the US elections on November 5th, when President-elect Donald Trump secured the win. President-elect Trump has prioritised positioning the US as the global crypto capital. Alongside VP-elect JD Vance, he actively promoted crypto assets throughout his campaign, frequently emphasizing their role in his vision of “Making America Greater Than Before.” His appointment of Paul Atkins as the next chair of the Securities and Exchange Commission (SEC) has further increased optimism among cryptocurrency advocates. Atkins, known for his deregulation friendly approach, has publicly endorsed cryptocurrency.

In addition, President-elect Trump recently launched a new venture, World Liberty Financial, a decentralised finance platform dedicated to cryptocurrency trading, demonstrating a clear position on supporting digital currencies.  

Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance. The information and views were correct at time of publication but may have changed at point of reading.