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Will the Virgin Media and O2 merger mean cheaper bills?

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Written by: Emma Lunn
21/05/2021
The Competition and Markets Authority (CMA) is allowing the merger of Virgin Media and Virgin Mobile with O2 to go ahead.

The regulator had provisionally cleared the deal last month and has now confirmed the tie-up, which was first announced a year ago.

The move will create a telecoms giant to challenge the dominance of BT, which bought rival EE in 2015.

The CMA was initially concerned that the Virgin/O2 merger could raise prices or reduce the quality of wholesale services. Virgin supplies wholesale leased lines to mobile operators and O2 provides its mobile network to companies that do not have their own.

The CMA feared that the merger could lead to other companies being forced to offer lower quality mobile services or increase their retail prices which would negatively impact consumers.

However, following an investigation the regulator has now concluded that the deal is unlikely to lead to any substantial lessening of competition, so it’s allowing it to go ahead.

Martin Coleman, CMA panel inquiry chair, said: “O2 and Virgin are important suppliers of services to other companies who serve millions of consumers. It was important to make sure that this merger would not leave these people worse off. That’s why we conducted an in-depth investigation.

“After looking closely at the deal, we are reassured that competition amongst mobile communications providers will remain strong and it is therefore unlikely that the merger would lead to higher prices or lower quality services.”

Will the merger mean cheaper bills?

The Virgin Media and O2 merger could mean more customers will be able to access the 5G network. Virgin Media struck a deal with Vodafone to use its 5G network and the deal is likely to mean that O2 customers will also have access to this.

Usually, buying your mobile and home broadband from the same supplier works out cheaper. So the merger could see more, and cheaper, mobile and broadband bundles.

Experts also say that the merger will put Virgin Media/O2 in a position to take on BT/EE on price.

Ernest Doku, telecoms expert at Uswitch.com, said: “Now we can look forward to the prospect of a new telecoms titan in town, setting up a heavyweight battle with the all-powerful BT. There is an Avengers-style showdown looming, with BT and EE lining up against the combined strengths of O2 and Virgin.

“With the green light from the CMA, the merger between O2 and Virgin Media could be completed by the summer. The watchdog was reassured that the tie-up wouldn’t result in higher costs for consumers or reduce competition in the marketplace.

“Both the O2 and Virgin Media brands are likely to remain in the short term, but we will have to see what this means for existing products and services like O2 Priority. Bosses previously promised the deal would bring £10bn of investment into the UK over the next five years, but there’s potential for the combined firms to make millions of pounds of annual savings.

“For consumers this tie-up could mean a greater choice of entertainment and faster broadband speeds. However, it’s vital that the combined brands maintain the high standards of value and service that customers have come to expect.”

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