Virgin Media and O2 are merging to compete against BT in a £31 billion deal. The aim is to create an entertainment and telecoms company that can provide some serious competition to telecoms giant BT.
Mobile & Broadband
O2, owned by Spain’s Telefonica, has around 34 million mobile phone customers. O2 also provides the network for Sky Mobile, Tesco Mobile and Giffgaff. Virgin Media, owned by Liberty Global are the largest broadband internet service provider outside the US. They have around 6 million broadband and cable TV customers and 3 million mobile users.
O2 operates in around 180 countries and has more than 9 million broadband customers (36% share of the Broadband market). They also have around 29 million mobile connections across the group.
It is thought that as well as potentially taking market share from BT, the merger will give Telefonica the opportunity to make some money from its O2 acquisition. Whilst giving Liberty Global the opportunity to combine fixed-line and mobile networks to create new areas of value.
What Virgin Media and O2 Say About The Merger.
O2 Says…
“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.” Comments (Telefonica chief executive Jose Maria Alvarez-Pallete).
Virgin Media (Liberty Global) Says…
Mike Fries, the Chief Executive Officer of Liberty Global said about the merger, “With Virgin Media and O2 together, the future of convergence is here today. We’ve seen the benefit of FMC first-hand in Belgium and the Netherlands. When the power of 5G meets 1 gig broadband, U.K. consumers and businesses will never look back. We’re committed to this market and are right behind the Government’s digital and connectivity goal”.
What About The Regulator?
With a merger of this size competition is clearly an issue. Many of the main telecoms commentators seem to think that the Competition and Markets Authority will allow the merger. However, this will depend on how the deal affects consumers.
Virgin Media and O2 Merging – What Does This Mean For Your Business?
Virgin Media and O2 Telefonica gain access to Virgin’s broadband, cable and mobile. Thereby giving it the opportunity to make more money out of O2. Liberty Global gains access to O2’s vast and reliable mobile phone network. Allowing them to combine fixed-line and mobile networks to create new value.
Meanwhile, both partners can leverage the synergies and new opportunities the merger will provide. This will allow them to diversify their products and services whilst providing some serious competition to BT. Furthermore they will look to provide new broader ranges of products and better services in addition to faster connections to businesses. It has been reported that both companies are looking to invest £10bn over the next five years.
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