Why did Vodafone shares jump 3% this week?

Vodafone shares experienced a significant 3% increase on Wednesday, driven by a Reuters report indicating that a formal announcement regarding merger plans between Vodafone and Three (CK Hutchinson) is expected to be made in the coming days. This long-awaited merger is poised to transform the telecom industry, positioning the combined entity as the largest mobile operator in the UK.

Reports suggest that Vodafone will emerge as the majority owner, holding a 51% stake, while Hutchison will possess 49% of the newly formed company. Analysts estimate that the merged entity could be valued at approximately £15 billion. However, regulators are likely to subject the deal to thorough scrutiny due to its potential impact on competition within the industry.

This development comes at a time when the London stock market’s former largest stock is trading at its lowest level in 25 years. Vodafone’s shares have experienced a significant decline of 40% since last summer, primarily due to increased competition in the market.

The potential for a turnaround in the fortunes of this former FTSE 100 giant has attracted numerous retail investors, especially considering the mobile phone giant’s dividend yield, which now approaches 10%.

No official comment has been made yet by the companies.