Virgin Media and O2 join forces to take on BT
Mobile operator O2 and broadband giant Virgin Media are about to merge, creating one of the UK’s largest entertainment and telecommunications companies and a big rival to BT.
Liberty Global, owner of Virgin Media, and Spanish Telefonica, owner of O2, said they had agreed on the conditions for joining forces.
O2 is the largest telephone company in the UK with around 34 million users.
Virgin has around six million broadband and cable TV users and three million more mobile users.
In addition to having its own subscribers, O2 provides the network for Tesco Mobile, Giffgaff and Sky Mobile.
The bond will create a great rival for BT by bringing together different platforms.
Telefonica CEO Jose Maria Alvarez-Pallete said: “The combination of O2’s number one mobile business with superfast broadband and entertainment services will be a turning point in the UK at a time when to which the demand for connectivity has never been greater or more critical “.
Mike Fries, CEO of Liberty Global, said: “Virgin Media has redefined broadband and entertainment in the UK with lightning-fast speeds and the most innovative video platform. And O2 is widely recognized as the most reliable and mobile operator. admired in the UK. “
Karen Egan, a telecommunications analyst at Enders Analysis, told the BBC’s Today program that the deal was “a random marriage of goals” for the two parent companies.
Telefonica was “eager to monetize” its stake in O2, while Liberty Global had long believed in the combination of fixed and mobile networks, she said.
The new merged company would now be able to “diversify and match some of BT’s innovative products,” he added.
The companies said O2 would be valued at £ 12.7 billion and Virgin Media at £ 18.7 billion, both on a total corporate value basis.
“O2 [is] be transferred to the joint venture on a debt-free basis, while Virgin Media will make a contribution of £ 11.3 billion in net debt and debt-like items, “said the companies in a joint statement.
Telefonica tried to sell O2 to Three’s owner, CK Hutchison, for £ 10.3 billion in 2015. However, that deal was blocked by the European Commission for fears that it would leave only three of the UK’s leading mobile operators. .