O2 and Virgin Media will complete their £31 billion merger by June 1 after the deal received final approval from UK competition authorities.
The combination of O2’s mobile network and Virgin Media’s cable infrastructure will immediately create one of Europe’s largest telecoms organisations, powering communications for nearly 40 million subscribers.
Consolidation would also result in £6.2 billion in savings and provide the scale and capability to rival BT and Vodafone in the field of converged networking services.
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Virgin Media-O2
Parent companies Liberty Global and Telefonica have pledged to create 4,000 jobs and 1,000 apprenticeships if they receive regulatory approval and have committed to increase the combined firm’s gigabit broadband footprint by an additional one million premises, bringing the total figure to 16 million, within 12 months of the merger.
There are also pledges to add a further seven million homes to ‘gigabit networks’ and to cover more than 100 towns and cities by the end of 2021.
The green light had been expected after the Competitions and Markets Authority (CMA) said last month it could find no reason to block the transaction. Its inquiry wasn’t concerned about the potential impact on the consumer market given the two firms’ complementary customer bases, but rather any negative effect on the wholesale market.
Formal approval means all regulatory conditions have now been met.
“O2 and Virgin are important suppliers of services to other companies who serve millions of consumers. It was important to make sure that this merger would not leave these people worse off. That’s why we conducted an in-depth investigation,” said Martin Coleman, CMA Panel Inquiry Chair.
“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.
The joint-venture has already started assembling its leadership team, with Virgin Media CEO Lutz Schüler and O2 CFO Patricia Cobain retaining their roles at the enlarged entity.
“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,” said Mike Fries, CEO of Liberty Global, and José Maria Alvarez-Pallete, CEO of Telefonica. “We thank the CMA for conducting a thorough and efficient review. Lutz and Patricia are now set to take the reins and launch a national connectivity champion that will connect more people, ignite more businesses back to growth and power more communities for the greater good.”
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