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O2 and Virgin Media announce mega merger

Paloma Kubiak
Written By:
Paloma Kubiak

O2 has announced a merger deal with Virgin Media which will create one of the UK’s largest telecoms firms to rival BT and Sky.

The announcement comes just days after Telefónica, the Spanish owner of O2, confirmed it is in discussion with Virgin Media owner Liberty Global over a possible merger deal.

O2 has been valued at £12.7bn and Virgin Media at £18.7bn. The £31bn mega merger deal would be a 50:50 joint venture, bringing together 46 million video, broadband and mobile customers from both providers.

The move is subject to regulatory approval with the transaction set to complete around the summer of 2021. It will be a major rival to BT and Sky.

Telefonica chief executive officer, Jose Maria Alvarez-Pallete, said, “Combining O2’s number one mobile business with Virgin Media’s superfast broadband network and entertainment services will be a game-changer in the UK, at a time when demand for connectivity has never been greater or more critical.

“We are creating a strong competitor with significant scale and financial strength to invest in UK digital infrastructure and give millions of consumer, business and public sector customers more choice and value.  This is a proud and exciting moment for our organisations, as we create a leading integrated communications provider in the U.K.”

Mike Fries, chief executive officer of Liberty Global, said, “We couldn’t be more excited about this combination. Virgin Media has redefined broadband and entertainment in the U.K. with lightning fast speeds and the most innovative video platform. And O2 is widely recognised as the most reliable and admired mobile operator in the UK, always putting the customer first. With Virgin Media and O2 together, the future of convergence is here today.”

‘Titan of the telecoms industry’

Ernest Doku, mobiles expert at Uswitch.com, said: “This merger between the UK’s biggest mobile company and a prevailing broadband giant will create a titan of the telecoms industry that will almost certainly throw down a challenge to the most dominant player, BT.

“It’s a natural and complementary fit, with O2 returning to fixed-line broadband and Virgin Media bolstering its mobile proposition.

“With Vodafone having courted a tie up with Virgin Media in the past and Three being blocked from acquiring O2 in 2016, it will be interesting to see if today’s news sparks an arms race in the rest of the industry.

“This joining of forces is undoubtedly big news – but the most important thing is that customers will benefit rather than lose out. It’s vital that the combined brands maintain the high standards of customer care and service that people have come to expect.

“Both the O2 and Virgin Media brands are expected to remain in the short-term, but it will be interesting to see what this means for existing customers in terms of products and access to extra services, such as O2 Priorities.”