Britain clears $44 bln Virgin-O2 mobile merger deal
Britain’s competition regulator cleared a $44 billion merger between broadband company Virgin Media and Telefonica’s (TEF.MC) UK mobile network O2 on Thursday, after a months-long review.
Virgin owner Liberty Global (LBTYA.O) and Spain’s Telefonica agreed the merger a year ago, creating a powerhouse in broadband and mobile to take on market leader BT (BT.L).
“After looking closely at the deal, we are reassured that competition amongst mobile communications providers will remain strong and it is therefore unlikely that the merger would lead to higher prices or lower quality services,” Martin Coleman of the Competition and Markets Authority (CMA) said.
The companies said the deal, which values O2 at 12.7 billion pounds and Virgin Media at 18.7 billion pounds to give the new group a combined value of 31.4 billion pounds ($44.4 billion) including debt, is expected to close by June 1.
“This is a watershed moment in the history of telecommunications in the UK as we are now cleared to bring real choice where it hasn’t existed before, while investing in fibre and 5G that the UK needs to thrive,” Liberty Global CEO Mike Fries and his Telefonica counterpart José Maria Alvarez-Pallete said in a joint statement following the CMA approval.
The 50:50 joint venture, which will be led by Virgin Media boss Lutz Schüler, will have 11 billion pounds of annual revenue, the two owners said.
The CMA had been concerned about the possible impact of the merger on the mobile market given that both companies sold wholesale services to other operators.
However it gave the deal provisional approval last month after concluding that the presence of other players in the market offering rival services, such as BT and Vodafone, would maintain competition.
