The parent companies of Virgin Media and O2 have confirmed they will merge their UK operations into one in a deal worth £24 billion.
The 50-50 joint venture plans to invest £10 billion into the UK over the next five years.
The combination of Virgin Media and O2 will create a nationwide integrated communications provider with over 46 million video, broadband and mobile subscribers and £11 billion of revenue.
According to the two companies, the joint venture will provide more competition in the marketplace and choice for consumers.
The two companies also said they believe the merger will enable them to challenge in the B2B space, in areas such as Cloud, big data, Internet of Things and cybersecurity services.
The deal, which is subject to regulatory approval, is expected to close in mid-2021, with the new venture’s management structure expected to be announced prior to completion.
José María Álvarez-Pallete, chairman and chief executive of Telefónica, 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.”
Rumours of a merger between the two companies first began earlier in the week.
Alex DeGroote, independent media analyst, tells TVBEurope the deal is highly significant for the UK telecoms and media industry.
“O2 is already the UK’s number one in mobile, Virgin has around 6 million cable and broadband users. Consolidating the two entities means consumers can get the full suite of mobile; fixed line; broadband; and TV. Hence the deal now increases the competition for the likes of BT, Vodafone and Comcast/Sky. The UK consumer should benefit from this, in terms of competitive pricing.
“At the same time, these deals are hard to execute, and with the current pandemic in the foreground, integration of two complex operations will not be simple. Telefonica has been looking for a solution to its O2 ownership for some time, this joint venture delivers it.”