Merge of O2 and Virgin Media

O2 and Virgin Media are due to merge, this will create on of the UK’s largest entertainment and telecoms companies, a rival to BT.

Terms have been agreed for the merger say spokespeople from the two companies, Telefonica and Liberty Global.

However, the deal is yet to be investigated by the consumer group Which?, who have been asked by the Competition and Markets Authority because it, “could have a significant impact on consumers”.

Which? went on to say: “Neither provider stands out in our recent customer satisfaction surveys, and any merger should only be allowed to go ahead if it delivers positive outcomes for consumers.”

O2 currently has a customer base of around 34 million on mobile phones, while Virgin has about six million broadband and cable TV customers and another three million mobile users.

O2 also provide their network for use by Tesco Mobile, Giffgaff and Sky Mobile, the chief executive Jose Maria Alvarez-Pallete said: “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.”

Despite concerns raised many third parties see the merger as a good thing, as it will allow the company to offer cost savings to the end consumer.

Ernest Doku, mobiles expert, agrees with these thoughts..

“It will be interesting to see what this means for existing customers in terms of products and access to extra services, such as O2 Priorities.

“For all customers there is the exciting prospect of greater breadth of entertainment and faster speeds to look forward to.”

There seems to be little doubt in the companies minds that this merger will pass with little competition, this is due to the merger of BT and EE in 2016 being allowed, and those companies where a lot larger.

However Hutchison (Three) were blocked from actioning a potential acquisition of Telefonica that same year.

The companies said O2 would be valued at £12.7bn and Virgin Media at £18.7bn, both on a total enterprise value basis.

“O2 [is] to be transferred into the joint venture on a debt-free basis, while Virgin Media to be contributed with £11.3bn of net debt and debt-like items,” The companies shared in a joint statement.

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