O2 is in talks with rival Virgin Media about a potential £24 billion mega-merger, it was confirmed yesterday.
The tie-up would transform the telecoms market overnight, creating a powerhouse to challenge former state monopoly BT.
O2’s owner, Spain-based Telefonica, said the telecoms firm was in talks with Virgin Media owner Liberty Global about the deal. It would reportedly see the rivals take 50-50 stakes in the combined business, which Goldman Sachs said could be worth £24.2 billion overall.
Negotiating: O2’s owner, Spain-based Telefonica, said the telecoms firm was in talks with Virgin Media owner Liberty Global about the deal
O2 already operates the UK’s largest mobile network, with 34m customers, while Virgin Media is one of the biggest internet providers with 6m customers. Virgin also has about 3m mobile customers.
Alongside EE owner BT, the enlarged business would become just the second major provider of both mobile and fixed broadband networks in Britain.
However, Telefonica cautioned that its talks with Liberty Global, owned by billionaire John Malone, might not succeed.
The potential merger with Virgin Media would end years of uncertainty for O2. It was previously on course to be sold to Three owner Hutchison in 2016 for £10 billion, but the deal was thwarted by competition officials at the European Commission.
Since then, there has been persistent speculation about whether Telefonica would seek another deal or float O2 on the London stock exchange.
Deutsche Bank yesterday said the merger of Virgin Media and O2 would ‘resolve both companies’ long-term strategies for fixed-mobile convergence and provide an increased customer base for Virgin Media to cross-sell its broadband and TV services’.