O2–Virgin Media merger talks confirmed

The UK telecoms market could be in for a massive shake up, with Telefonica confirming rumours that it was in talks with Liberty Global over the potential merger of their UK businesses, O2 and Virgin Media.

 

While Telefonica said that there was “no guarantee” of the deals success, the company did today confirm that discussions were underway.

 

The merger of the two companies would mean big changes for the UK telecoms market. Not only would it create an operator to challenge BT’s hegemony, it would also leave Vodafone and Three without their own fixed-line consumer networks.

 

To some extent, this deal would be in line with Telefonica’s new strategy of pulling out of foreign markets, while seeking to focus more closely on its Spanish, German and likely Brazilian businesses. In the past few months, Telefonica has been steadily pulling out of South and Central America.

 

This is not the first time Telefonica has tried to offload O2. Indeed, the debt-ridden telco tried to sell the business to Three back in 2015, but was blocked by the anti-trust regulator.

 

The Financial Times reports that Liberty Global has also been in talks with Vodafone recently, having last year signed a network sharing deal in the UK, as well as selling the latter a large chunk of its European businesses. 

 

With a reported $7.4 billion ready to invest, Liberty Global has the power to drastically reshape the UK’s telcoms industry, though whether that will be at the side of Vodafone or O2 remains to be seen.