Virgin Media And O2 Confirm Merger
The two parent companies that own telecommunications giants Virgin Media and O2 have announced that they will move forward with a planned $31bn merger that will blend the two companies together, hoping to create a significant competitor to market dominators BT and Sky.
The companies in question – Liberty Global and Telefonica – said in a statement that they planned to merge in a joint venture across telecommunications and media, with an equal fifty-fifty split occurring between both conglomerates.
It’s hoped that this new deal will stimulate market competition and give more back to the consumer as it challenges long-held market shares dominated by other major players in the industry.
As part of the deal, the new company will offer telephone, cable and internet services in competitive bundles for lower prices than currently offered. As of writing, the company has confirmed it has 47m customers and will generate around £11bn in revenue, thanks to the combining of two individual customer bases.
In a statement, Liberty Global CEO Mike Fries argued that they felt it was only a matter of time before the two companies merged, particularly after the astounding success of BT’s purchase of mobile company EE back in 2016.
Despite growing uncertainty about Brexit, the ongoing coronavirus crisis and increased concern about what the UK’s new place in the global economy might be, both companies are eager to invest in the UK and its workers and plan to invest £10bn in increasing the country’s tech capability in areas like 5G and high-speed broadband.
Perhaps most importantly, however, the two companies have stated there is the possibility that the newly merged company could float on the stock market within the next three years.
This attractive opportunity for investors could see increased interest in the company as it takes it first tentative steps into the cut-throat world of telecommunications in the UK.
Liberty Global already has a significant stake in the UK media and communications market – it has a 10% share in ITV and a 50% stake in All3Media, the production company who make the British soap Hollyoaks and the BBC darling Fleabag.