Virgin-O2 merger cleared by UK competition watchdog

A person walks past a Virgin Media cell phone store in London on May 4, 2020 that has been closed due to the Covid-19 pandemic.

Tolga Akmen | AFP via Getty Images

LONDON – The £ 31.4 billion (US $ 44.4 billion) merger of Virgin Media and O2 has been cleared by UK competition authorities.

The UK’s Competition and Markets Authority announced on Thursday that it had given the deal a green light after determining that it is unlikely that competition in the telecommunications market would wane significantly.

The CMA had previously expressed concerns that the tie could lead to price increases or affect the quality of wholesale services, which it claims would have had a negative impact on consumers.

The watchdog said there is sufficient competition in the leased line market from players like BT Openreach, which means the combined company “must continue to maintain the competitiveness of its service or risk losing wholesale usage”.

At the same time, according to OMA, the CMA faces tough competition in the market for mobile communications networks.

“O2 and Virgin are key service providers to other companies serving millions of consumers. It was important to ensure that these people were not put in a worse position by this merger. So we conducted an in-depth investigation,” said Martin Coleman. CMA panel examination chair.

“After careful review of the deal, we have confidence that competition between wireless operators will continue to be fierce and therefore it is unlikely that the combination will result in higher prices or lower quality services,” added Coleman.

The deal between Liberty Global’s Virgin and Telefonica’s O2 will create a new giant in the UK telecommunications industry. The new group will have a total of 46 million video, broadband and cellular subscribers and sales of £ 11 billion, the companies said in May last year when they announced the transaction.

“This is a turning point in the history of telecommunications in the UK as we now have the opportunity to make real decisions where they haven’t been while investing in the fiber and 5G that the UK needs to be successful” Mike Fries, CEO of Liberty Global and Telefonica boss José Maria Alvarez-Pallete said in a joint statement on Thursday. “We thank the CMA for conducting a thorough and efficient review.”

Telefonica’s shares fell 1.3% in early deals Thursday.

By combining the two companies, Virgin Media will also be able to draw on O2’s expertise in developing next-generation 5G cellular networks, which are expected to be a major revenue driver for telecommunications companies in the future.

Comments are closed.