What does the Virgin Media-O2 merger mean for the UK?

O2 and Virgin Media have announced they are to merge to create a new media and telecoms giant.

Here is a look at what the deal could mean for businesses and customers in the UK.

– What is happening?

The parent companies of O2 and Virgin Media have confirmed they are in discussions over the tie-up, which would create a £31 billion joint venture.

It would combine 02’s mobile network with Virgin Media’s broadband, pay-TV and mobile offerings to create a new rival for BT, which also owns mobile network EE.

– What could the merger mean for customers?

An O2-Virgin Media joint venture would be likely to give customers another option for “converged” services – TV, mobile and broadband all from one place, industry expert Kester Mann said.

The analyst, from CCS Insight, said the move will “transform the UK telecoms landscape”.

“A combination of O2 and Virgin Media is a natural fit,” he added. “Each side gains crucial assets it severely lacks: a mobile network for Virgin and a fixed-line (broadband) arm for O2.”

– Do customers need to do anything right now?

No. Nothing has changed for O2 or Virgin Media customers and they do not have to take any action right now.

Once the deal is completed next year, they are likely to start seeing more offers comprising broadband, pay-TV and mobile plans from across the two firms.

EE and BT customers have seen similar offers since the two merged in 2016.

BT
(Nick Ansell/PA)

However, Virgin Media and O2 have not revealed any details of what their combined offering will look like.

– What have the companies said about the deal?

Mike Fries, chief executive of Liberty Global, the parent company of Virgin Media, said “the future of convergence is here”, adding: “UK consumers and businesses will never look back.”

O2 parent company Telefonica and its chief executive Jose Maria Alvarez-Pallete described the deal as a “game-changer” at a time when demand for connectivity has never been higher.

– When is the deal likely to be completed?

Subject to regulatory approval, the deal is expected to be completed by the middle of next year.

– Could there be any delays?

The coronavirus pandemic makes any prediction difficult, but industry experts say they do not expect any regulatory hold-ups.

“We expect that regulatory approval is unlikely to be an issue as the deal does not create a significantly stronger player in either the fixed-line or mobile markets,” Mr Mann said, adding that a similar deal between BT and EE was approved.

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