“She’s all signed up to the strategy,” says Karen Egan, head of mobile at Enders Analysis. “Nonetheless, you will expect her to want to make her own mark somewhat, and I suppose there’s probably a bit of nervousness about what that might look like.”

“I’m not a huge fan of all this tinkering and restructuring in telecoms companies, just to make your mark as a new chief executive,” says Egan. “BT is not a place for revolutions.”

On valuation grounds the proposed transaction favoured Iliad. The JV, with an enterprise value of €14.9bn, would have raised €7bn in new debt to pay €6.6bn to Vodafone and €0.4bn to Iliad. That would have left Vodafone with cash and securities worth €10.5bn, or eight times its Italian unit’s forecast ebitda after lease payments. Iliad, admittedly faster growing but as yet barely profitable, would have been valued at 17 times ebitda, estimates Karen Egan at Enders Analysis. 

“Culturally, Vodafone is closer to Swisscom than to Iliad, whose methods of forcing the agenda, for example anticipating the publication of a press release on its own offer, may have irritated management,” notes Karen Egan , the telecoms analyst for the London firm Enders.

Karen Egan, an analyst at Enders Analysis, also sees a bigger benefit: “Unlike most industry consolidation, a merger in the mobile sector does not imply taking capacity out of the market – in fact the reverse”. So, there’d be the same amount of spectrum but more competition to fill it, potentially leading to better deals from “mobile virtual network operators”, such as Tesco, Asda and Sky that offer services via the four networks.

But some of these smaller debt-laden companies are now being squeezed by rising interest rates and disappointing uptake, resulting in slowdowns of their rollouts and more than 1,250 job cuts across the industry in 2023, according to data compiled by Enders Analysis.

James Barford, head of telecoms at the research firm, estimated total capital expenditure by altnets of between £8bn to £9bn so far. But many altnets are now “struggling due to tougher financial conditions” and deployments have been paused as “investors demand better performance on existing footprints”, Barford said.

He added consolidation was “sorely needed” but that negotiations will be challenging because some altnets will not be worth the amount invested in them. Potential acquirers will also be debating whether it is more cost effective to build or buy areas that do not overlap with their own full-fibre footprints.

Tom Harrington, head of television for Enders Analysis, said people were only prepared to pay for a maximum of three video subscriptions — with Netflix, Disney+ and Amazon Prime Video emerging as the dominant players. Newer entrants such as Paramount+, NBCUniversal’s Peacock and Warner Bros Discovery’s Max are expected to struggle in the battle for subscribers. “If you’re watching one service, then your sense of the value for money that the others provide is lowering,” he said.

He pointed to the market-leading 45 minutes per day users spend with Netflix as driving its unexpected success in converting “parasitic” users who have been password sharing for up to a decade.

“The outperformance of this initiative is fundamentally a testament to the product itself,” he said. “If you have been getting something for free for a long period of time then it is difficult to persuade people to pay but Netflix ­appears to have converted many non-paying users.”

Karen Egan, analyst at Enders, said the merger would be likely to be referred for a so-called Phase 2 inquiry. “Clearly there will be a degree of overlap as they both offer telecoms services across an array of customer types, but the bulk of their customer bases are helpfully quite different, as the Vodafone brand has been more successful at the high end of the consumer market, while Three is much more of a value proposition,” she said.