VodafoneThree to slash £1bn in costs after mega merger deal

Mobile phone giant VodafoneThree has announced plans to scale up its UK cost-cutting target to £1 billion annually by 2032, continuing to extract efficiencies in the wake of last year’s landmark merger.

The operator, which was formed in 2025 when Vodafone merged its UK operation with Three UK to create an enterprise valued at almost £14 billion including debts, has earmarked a further £300 million in annual savings above its initial £700 million-a-year goal.

The business stressed that the additional savings would not affect its workforce.

The bulk of the cost reductions will be delivered by scaling back its network of mobile phone masts and infrastructure towers.

The company aims to trim the network from roughly 37,000 sites down to about 26,000, closing down overlapping installations where Vodafone and Three UK operate nearby.

Further efficiencies are being unlocked after Vodafone bought out the 49 per cent stake owned by former partner CK Hutchison Group Telecom Holding for £4.3 billion in July, allowing the group to remove redundant costs under full ownership.

Margherita Della Valle, group chief executive of Vodafone, said: “We created VodafoneThree because we saw the opportunity to transform the UK market – to create the scale to invest, to deliver a step change in network quality and customer experience across every region of the UK and to build a stronger business, creating sustainable long-term value.

“After a strong start, we now have even greater confidence in the opportunity ahead.

“That’s why we are upgrading our cost target to £1 billion, with VodafoneThree set to become an increasingly important contributor to Vodafone’s growth ambitions.”

The group said it would increase annual savings to £800 million by 2029-2030 and £1 billion by 2031-32.

Since completing the merger of Vodafone and Three in the UK, the company has been working to integrate the two brands, including sharing their 5G networks.

VodafoneThree became the UK’s largest mobile operator following the deal and is one of the country’s fastest-growing broadband providers.

It had about 27 million customers after combining, but up to 50 million people in the UK have access to its 5G speeds thanks to the combined spectrum.

In an update to investors on Thursday, Vodafone said it was now setting its sights on achieving underlying earnings growth in the mid-to-high single percentage digits annually between 2024-2025 and 2031-2032.

It also aims to more than triple operating free cash flow at VodafoneThree by 2031-2032 relative, compared with 2024-25.