The UK’s Competition and Markets Authority (CMA) has approved the £31 billion ($44B) merger between Liberty Global-Owned Virgin Media and telecoms giant Telefonica’s British mobile company O2.
Following regulatory clearance, Virgin Media and O2 will complete their transaction on June 1. Virgin Media CEO Lutz Schüler will become chief executive of the new company, while O2’s CFO Patricia Cobian will take on the same role at the merged venture.
The two companies will form a 50:50 joint venture, which Liberty Global and Telefonica hopes will become an internet and mobile powerhouse as demand for super-fast broadband grows and 5G rolls out across the UK.
The combined companies will have 46M video, broadband and mobile subscribers in the UK, while their joint revenue is worth £11B. The merger will create savings of £6.2B, mainly from reducing capital expenditure.
Martin Coleman, CMA panel inquiry chair, said: “O2 and Virgin are important suppliers of services to other companies who serve millions of consumers. It was important to make sure that this merger would not leave these people worse off. That’s why we conducted an in-depth investigation.
“After looking closely at the deal, we are reassured that competition amongst mobile communications providers will remain strong and it is therefore unlikely that the merger would lead to higher prices or lower quality services.”
Liberty Global chief executive Mike Fries and Telefonica CEO Jose Maria Alvarez-Pallete added: “This is a watershed moment in the history of telecommunications in the UK as we are now cleared to bring real choice where it hasn’t existed before, while investing in fibre and 5G that the UK needs to thrive. We thank the CMA for conducting a thorough and efficient review.”
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