O2/Virgin Media: reshaping British telecoms?
Spain’s Telefónica has spent the past five years trying to get shot of its O2 mobile phone business. But hola! – it looks like opportunity has struck when least expected, said The Times. O2 is reportedly “closing in” on a multibillion-pound merger with Virgin Media that could “reshape the British telecoms market” by creating a “formidable competitor to BT”. The deal is a joint venture between Telefónica and Liberty Global – the outfit controlled by the US “cable cowboy” billionaire John C. Malone, which bought Virgin Media for £15bn seven years ago. Shareholders are hot to trot: if nothing else, the deal will result in big cost savings.
“Making life hell for BT” is probably just an added bonus for Malone, 79, “an opportunistic dealmaker” who has spotted that “mobile and fixed-line assets are converging in the age of 5G”, said Nils Pratley in The Guardian. He needed a UK mobile partner, and that meant pairing up with either O2 or Vodafone. Forget about reshaping the industry – in practice, this deal “will probably do the opposite”, by helping to cement market shares. “Regulators should be on high alert.”
Should big M&A deals be allowed at all during a pandemic? Two prominent Democrats, Elizabeth Warren and Alexandria Ocasio-Cortez, are gunning to freeze them in the US, via a “Pandemic Anti-Monopoly Act”, blocking acquisitions by companies with revenues over $100m and those owned by private equity or hedge funds, said The New York Times. This explosive proposal is “unlikely to go anywhere” in the Republican-controlled Senate. But the Democratic presidential front-runner Joe Biden – who has already blasted corporate America for being “greedy as hell” – could be pushed into “embracing the ban”. Perhaps Liberty’s “cable cowboy” thought it best to strike while he still could.