Virgin Media UK Says Goodbye to BT, Signs Vodafone for Mobile UPDATE

Cable TV and broadband ISP Virgin Media UK (Liberty Global) has today made the surprise announcement that their long-running Mobile Virtual Network Operator (MVNO) agreement with BT (EE) will be coming to an end. Instead they’ve signed a new 5-year partnership deal for Virgin Mobile with rival operator Vodafone.

Previously there had been some speculation that Virgin Media might seek to swap their MVNO setup to use a different network, which was partly fuelled by the operator’s concern over BT’s earlier £12.5bn merger with EE (i.e. BT is now Virgin’s arch rival in both the fixed line and mobile space, not to mention TV). Despite this, in 2017 Virgin moved to extend their agreement with BT / EE, which is due to run until 2021 (here).

Under the new deal Virgin Mobile‘s services – covering around 3 million customers – will start to transition to the Vodafone network from the end of 2021 and there they will stay until 2026, although Virgin Media intends to launch their new ultrafast 5G (mobile broadband) products via Vodafone “in the near future” (i.e. ahead of the transition date).

At this point it’s worth considering that Vodafone and Virgin Media have been repeatedly linked with a future asset swap or possible merger in the United Kingdom, although until now none of their earlier talks have turned into anything concrete (except elsewhere in the EU). Despite that any move to adopt Vodafone for Virgin Mobile would of course make a bigger agreement in the future a lot easier, if it were to ever occur.

Speaking of which, Virgin Media’s business division (VMB) has also struck an “extensive wholesale agreement” with Vodafone relating to the supply of various network services. We have asked for further details on this.

Lutz Schüler, Virgin Media CEO, said:

“This agreement with Vodafone will bring a host of fantastic benefits and experiences to our customers, including 5G services in the near future. Twenty years ago Virgin Mobile became the world’s first virtual operator and this new agreement builds on that heritage. It will open up a whole new world of opportunity for Virgin Media as we focus on becoming the most recommended brand for customers and bring our mobile and broadband connectivity closer together in one package for one price.

We’ve worked with BT to provide mobile services for many years and will continue to work together in a number of areas. We want our customers to have a limitless experience – it’s now the right time to take a leap forward with Vodafone to grow further and faster.”

Nick Jeffery, Vodafone UK CEO, said:

“We are delighted that Virgin has recognised the huge investments we’ve made, and continue to make, in building the UK’s best mobile network and our role in challenging the market with new commercial services. As a result, they have chosen us to work with them in the next phase of their development.

This is an exciting deal between two great British brands. We are combining our strong heritage in innovation to create a world without limits for our customers through unlimited data offers and 5G.”

Shifting MVNO platforms is a major task for any large operator and often results in some problems (e.g. TalkTalk’s past attempt to migrate from Vodafone to O2 was plagued by difficulties and they eventually abandoned mobile altogether). Nevertheless such decisions are often take a couple of years in advance (necessary for forward planning) and the move to rollout 5G will no doubt be another reason why Virgin Media may have reconsidered their existing agreement with BT.

As a full MVNO provider Virgin Mobile has control over the products and services it offers, which among other things means existing customers will not need to change their SIM cards as part of this agreement and that’s an important point (saves a lot of hassle). Further details on product offerings and network transition will be provided in “due course.”

UPDATE 12:55pm

We’ve added a comment from BT.

A BT Spokesperson said:

“The successful relationship between BT and Virgin Media spans nearly 20 years and they remain a highly valued customer. We will continue to provide a full spectrum of mobile services to Virgin Media and support Virgin Mobile customers under our existing MVNO agreement, until they transition in 2022.

Our EE network is consistently ranked number one for speed and coverage in independent benchmarking tests, providing our EE customers and MVNO partners with the UK’s best mobile experience. We were the first to launch 5G in the UK, with 5G in more places across the UK than any other operator, and we’re continuing to invest in providing our customers the best network across the UK.”

The contract was reportedly worth around £200m to BT and their shares have taken a dip since the announcement.

UPDATE 8th November 2019

Lutz Schüler has elaborated a bit more on the VMB wholesale agreement with Vodafone: “We have now really engaged in a closer partnership with Vodafone. And as we have said, Vodafone are very fast to deploy 5G base stations, and they need a backhaul opportunity. So therefore, we have also closed a huge deal on dark fibre and mobile backhaul at the same time when we have closed an MVNO deal, and we are very pleased with that … this is an area which has huge growth opportunity in the future.”