According to foreign media reports, British mobile operator O2 and telecommunications service provider Virgin Media will be merged to become one of the UK’s largest entertainment and telecommunications companies to challenge the market leader BT (British Telecom). Since the end of the supply chain review, the British telecommunications market has been relatively flat, but this merger has caused an uproar. And suddenly, the UK has become one of the most noteworthy markets.
Last Friday, Virgin Media’s parent company Liberty Global and O2 parent company Telefonica reached an agreement to merge the two companies:Virgin Media and O2 businesses in the UK. The transaction is expected to be completed by the middle of 2021. The two companies said that the combined new company will have 46 million video, broadband and mobile subscribers, as well as £ 11 billion in revenue, and pledged to invest more than $ 10 billion in network development over the next five years.
It is reported that O2 is the largest telephone company in the UK, with approximately 34 million subscribers. Virgin Media has about 6 million broadband and cable TV users, and another 3 million mobile users. Currently, Virgin Media is valued at approximately £ 18.7 billion, O2 is valued at approximately £ 12.7 billion, and the combined new company is valued at approximately £ 31.4 billion (approximately US $ 38.9 billion), and will become a new strong competitor in the British telecommunications market.
Telefonica CEO Joseph said: “In a period when network connection demand is so huge and so critical, combining O2’s number one mobile business with Virgin Media’s ultra-high-speed broadband network and entertainment services will disrupt the UK’s telecommunications market and change the market’s game rules.”
Mike Fries, CEO of Liberty Global, said: “Virgin Media has redefined the UK’s broadband and entertainment with agile speed and the most innovative video platform. O2 always puts customers first and is recognized as the most reliable in the UK. Mobile operator. With the merger of Virgin Media and O2, the future of convergence is today. ”
O2 and Virgin Media’s current subscriptions
As early as 2015, Telefonica tried to sell O2 to CK Hutchison for £ 10.3 billion, but the transaction was blocked by the European Commission due to competition concerns. The transaction between Virgin Media and O2 will also face regulatory review, but it is not expected to face the same problem. Although these two companies are both telecommunications companies, the business overlap is extremely small, and core competitiveness exists in different fields.
Market pattern reshuffled
This merger will also stimulate other players in the market. Analysts said that by then, the combined new company would bring competitive pressure to the UK’s largest mobile operator, British Telecom, Vodafone and Comcast (Sky).
CCS Insight’s Mann said: “Vodafone in UK seems to be the biggest loser because the deal exposes its weak position in the converged services market.” “We think this deal will have a ripple effect on the UK market: Vodafone, Three, Sky and TalkTalk will reassess their positions and cannot exclude the possibility of further transactions. ”
British Telecom Market Echelon
So, what should the merged O2/Virgin Media company be called?