Calling time on deal may cost Virgin

VODAFONE is likely to get millions from Virgin Media, which is set to abandon their mobile phone tie-up following its shock merger with O2.

Last November Virgin Media struck a five-year deal to transfer its three million-plus mobile phone customers from EE tovodafone.

Virgin Media’s business is reportedly worth £200million a year to EE and the transfer to Vodafone’s network was due to take place in the second half of 2021.

However it is understood thatvirgin Media will instead shift its mobile customers on to O2’s network, after last week’s announcement that they will merge to create a £31 billion rival to EE owner BT. It is believed that ditching the Vodafone deal will trigger a multi-million-pound penalty break clause forvirgin Media.

On Tuesday, Vodafone has its fullyear results and the City will be watching chief executive Nick Read to see how he will respond to the tie-up between one of its main rivals and Virgin Media. Market observers believe that he could try to gatecrash the merger.

One thing that could constrain Read’s ability to respond isvodafone’s debt, which stood at approximately £42 billion at the end of December.

Vodafone is expected to post a net profit of £835.8million for the year, compared to the £7 billion loss it registered for its 2018/19 year, which was triggered by the sale of its Indian business. Revenues are tipped to be 3.1 per cent higher at £32.3 billion.

Virgin Media declined to comment, while Vodafone did not respond to calls.