O2 and Virgin Media set for £31 billion telecoms mega-merger

7 May 2020, 08:38

Virgin Media and O2 are set for a multi-billion pound mega-merger
Virgin Media and O2 are set for a multi-billion pound mega-merger. Picture: PA
Nick Hardinges

By Nick Hardinges

Broadband giant Virgin Media and mobile operator O2 are set for a £31 billion merger which will create one of the UK's largest entertainment and telecoms companies.

Liberty Global and Spanish firm Telefonica, the parent companies of Virgin and O2 respectively, said they were "excited" ahead of their plan to join forces.

On Monday, the two giants confirmed they were in discussions over the possibility of combining.

The merger, once complete, will create a major rival for BT, which owns mobile operator EE, the UK's second-largest mobile network.

It will unite O2's 34 million mobile users with Virgin's 5.3 million broadband, pay-TV and mobile customers.

The deal is expected to be completed in the middle of 2021, pending regulatory approvals.

Chief executive of Telefonica Jose Maria Alvarez-Pallete
Chief executive of Telefonica Jose Maria Alvarez-Pallete. Picture: PA

It values Virgin Media at £18.7 billion and O2 at £12.7 billion - a combined £31.4 billion deal.

A statement said the pair will create a "full converged platform" for customers and will invest £10 billion in the UK over the next five years.

Mike Fries, chief executive officer of Virgin Media owner Liberty Global, said: "We couldn't be more excited about this combination.

"Virgin Media has redefined broadband and entertainment in the UK 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."

John Malone (L) and Mike Fries (R) of Liberty Global
John Malone (L) and Mike Fries (R) of Liberty Global. Picture: Getty

Jose Maria Alvarez-Pallete, chief executive of O2 owner Telefonica, 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."

O2 is the UK's largest phone company and provides the network for GiffGaff, Tesco Mobile and Sky Mobile.

The 50-50 joint venture is expected to deliver £6.2 billion worth of cost-saving synergies, the duo said.