O2 holds merger talks with Virgin
MOBILE operator O2 is in talks to merge withVirgin Media in a move which would create one of the UK’s largest telecoms and media firms.
Telefonica, O2’s Spanish owner, confirmed that it is in discussions with Virgin’s parent company Liberty Global over a possible deal between the two companies. It stressed that it is currently in the “negotiation phase”, and it is not guaranteed that the two parties will agree a deal.
A tie-up between the two companies would create a major rival for BT, which owns EE, the UK’s second largest mobile network. Any deal by the firms would bring together O2’s 34 million customers on its mobile network with Virgin Media’s 5.3 million broadband, pay-TV and mobile users.
O2 – which also provides the network for GiffGaff, Tesco Mobile and Sky Mobile – is the UK’s largest phone
By Henry Saker-Clark
company and is headed by chief executive Mark Evans.
Telefonica has been examining options for the O2 business since 2016, after a planned takeover by CK Hutchinson – which owns fellow mobile operator Three – was blocked by European competition regulators.
Talks between O2 and Virgin Media – whose chief executive is Lutz Schüler – also raise questions over the future of Virgin’s mobile operations, which were due to be taken over by Vodafone later this year.
In November, Vodafone won the fiveyear contract from BT-owned EE.
Paolo Pescatore, tech and media analyst at PP Foresight, said: “This is an intriguing move. For sure, it is more likely to appease regulators than two mobile operators coming together.
“Also, let’s not forget that the parents of both companies have been keen to offload these assets for a while. Therefore, there is more to this than simply convergence and competing with BT and Sky.”
Last year, Vodafone and Virgin Media signed a deal in the UK to use each other’s networks, which was viewed as a renewing of closer ties that could kick on to potential talks of a wider deal.
‘The parents of both companies have been keen to offload these assets for a while’