Telefonica and Liberty Global have announced that they will merge their operations in the UK, creating the country’s biggest fixed line and mobile network provider.
The £31 billion deal will see O2 UK (Telefonica) and Virgin Media (Liberty Global) combine their assets in a 50:50 joint venture.
O2 is currently the UK’s largest mobile network operator in terms of subscribers, with Virgin Media owning and operating the country’s second biggest fixed line fibre network.
The merger will create an entity that is capable of challenging BT and Openreach for supremacy in both markets and is expected to provide cost saving synergies of around £6.2 billion.
“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 UK,” said Telefonica’s chief executive officer, Jose Maria Alvarez-Pallete.
The deal will offer the pair enhanced opportunities to sign up subscribers to quad play service packages, combining O2’s mobile services and Virgin Media’s fixed line and TV bundle deals.
“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 recognized 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. We’ve seen the benefit of FMC first-hand in Belgium and the Netherlands. When the power of 5G meets 1 gig broadband, UK consumers and businesses will never look back. We’re committed to this market and are right behind the Government’s digital and connectivity goals,” said Mike Fries, chief executive officer of Liberty Global.
The merger will radically redefine the UK’s connectivity landscape. Until now, BT/Openreach has been the only provider with both fixed line and mobile network infrastructure. The deal will give O2 a significant advantage over the UK’s other mobile network operators, namely Vodafone and Three UK.