British wireless carrier Vodafone Group recently explored a potential purchase of Three UK from CK Hutchison, people with knowledge of the matter said.

Vodafone expressed interest late last year in acquiring its smaller rival, according to the people, who asked not to be identified because the information is private. The approach didn’t lead to an agreement, and it isn’t currently in active negotiations with CK Hutchison, the people said.

Shares of CK Hutchison, led by billionaire Victor Li, have risen 11% this year to give the Hong Kong conglomerate a market value of about US$27.5-billion. Vodafone has a market capitalisation of £31.8-billion.

Representatives for Vodafone and CK Hutchison declined to comment.

A combination of Vodafone and Three UK has been speculated for years, and Vodafone has teamed up with CK Hutchison in other markets like Australia. But in Britain, regulators have stood in the way of consolidation between wireless carriers. In 2016, Three was blocked from buying rival operator O2 by the European Union with backing from UK watchdog Ofcom.

Other markets have started allowing deals that reduce the number of mobile players from four to three — including in Ireland, where Three acquired O2’s local business. After Brexit and years of stagnant returns for the sector, some phone company bosses have been hoping the dynamic would change in the UK as well.

Three UK CEO Robert Finnegan has lamented the British phone market as “dysfunctional” and has expressed hope that regulators will now be more open minded to mergers. Meanwhile, Vodafone CEO Nick Read hinted at a combination with Three in a November interview with the Sunday Times newspaper.

Vodafone has about 20 million subscribers across its mobile, fixed line and broadband units, according to its website, compared with Three UK, which says it has 9.3 million. — Ruth David and Vinicy Chan, (c) 2022 Bloomberg LP