Virgin Media and O2 will close a £ 31 billion deal.
TOLGA AKMEN / AFP via Getty Images
Two of the UK’s largest telecommunications companies, O2 and Virgin Media, merge to form a new telecommunications giant confirmed on Thursday.
The deal for £ 31bn ($ 38bn) will transform mobile operator O2, owned by Telefonica, and broadband operator Virgin Media, owned by Liberty Global, into a company that creates a rival to Sky and BT. The newly founded telecommunications giant can offer its customers packages such as entertainment, broadband and mobile communications. The transaction is expected to close in the middle of next year, pending regulatory approvals.
“The combination of O2’s leading mobile business with the superfast broadband network and entertainment services of Virgin Media will play a crucial role in the UK at a time when the demand for connectivity has never been so high or critical,” said Jose Maria Alvarez -Pallete, CEO of Telefonica in a statement.
Mike Fries, CEO of Liberty Global, added that the two companies fully support the UK government’s digital and connectivity goals.
The merger will combine O2’s 5G network with Virgin Media’s gigabit broadband service, bringing together a combined customer base of over 40 million people. O2, originally BT’s own mobile operator before it was spun off in 2002, is now one of the UK’s largest mobile operators. BT acquired EE in 2016 to bring a mobile operator back under its roof and form a telecommunications giant that Virgin Media and O2 want to compete with.
“This merger between the UK’s largest mobile operator and a dominant broadband giant will create a telecommunications titan that is almost certain to be a challenge for the most dominant player, BT,” said Ernest Doku, a mobile phone expert on the price comparison site Uswitch. “It is a natural and complementary solution, as O2 is moving back to fixed broadband and Virgin Media is strengthening its mobile offering.”