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Competition Authority Clears O2 and Virgin Media UK to Merge

Thursday, May 20th, 2021 (9:34 am) - Score 4,512
virgin_media_o2_uk_merger

As expected the UK Competition and Markets Authority has today given their final clearance, without remedies, for cable broadband and TV provider Virgin Media (Liberty Global) and mobile operator O2 (Telefonica) to complete their £31bn merger (50:50 Joint Venture). A major full fibre and 5G rollout boost is anticipated.

The news, which ensures that the transaction will now definitely close by 1st June 2021, is expected to deliver substantial net synergies valued at £6.2 billion and create a “national connectivity champion” with £11bn of revenue, 46 million mobile, home and business connections. Not to mention the £10bn of planned capital expenditure over the next 5 years.

NOTE: The CMA’s final decision is virtually identical to their provisional one (here), so we won’t repeat that today.

The capex investment will be used to help acceleration the deployment of ultrafast 5G mobile (mobile broadband) and to, initially, expand their gigabit-capable home broadband network to reach an extra 1 million premises “within 12 months of the merger closing” (total of 16 million).

On top of that the merged company has also previously spoken of their “ambition to accelerate investments” and connect a further 7 million homes to their gigabit broadband network “in the coming years.”All of that fixed line expansion will involve the use of Fibre-to-the-Premises (FTTP) technology and should see the operator move into many smaller towns and villages.

Mike Fries, CEO of Liberty Global, and José Maria Alvarez-Pallete, CEO of Telefonica, said:

“This is a watershed moment in the history of telecommunications in the UK as we are now cleared to bring real choice where it hasn’t existed before, while investing in fibre and 5G that the UK needs to thrive. We thank the CMA for conducting a thorough and efficient review. Lutz and Patricia are now set to take the reins and launch a national connectivity champion that will connect more people, ignite more businesses back to growth and power more communities for the greater good.”

Admittedly it’ll take a bit longer than usual for O2’s mobile network to take over from Vodafone as Virgin Mobile’s current MVNO supplier because that deal still has another 4-5 years to run. But as the merger between EE and BT showed, it often takes several years to properly develop fully converged solutions and thus there’s no desperate need to break the current contract early.

After 1st June the merged company will finally also be able to take a decision on when or how to launch a wholesale solution for fixed line ISPs (here), which would place them into direct competition with Openreach (BT) at a much bigger level. Such a change would represent a seismic shift in the UK broadband market and give Virgin Media’s network a new lease of life for future support and upgrades.

Openreach are of course planning to deploy FTTP out to 25 million premises by December 2026 (currently at 4.6 million), so they’ll catch up eventually. But in the meantime Virgin Media’s gigabit-capable network is already available to well over 15 million homes and that will thus be very attractive to other ISPs.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
38 Responses
  1. Michael V says:

    This should be exciting.

  2. MikeyMole says:

    I need DOCSIS 3.1 now please! on upload too! Pllleeeeeaaaaaaaaaaaaaseeeee VM 🙂

    1. Damien says:

      Where as I need VM..

    2. Buggerlugz says:

      God, how dismal for us that Virgin is out only choice these days…..

    3. Damien says:

      Hey I’d take anything faster than FTTC that wants to come here – At the current rate it’s going to be Starlink

  3. Bishop Brennan says:

    We do need a National Connectivity Champion but it certainly won’t be Virgin/O2.

  4. Carl says:

    O2 seriously need the back haul and if it improves the current rollout of 5G to places like Chester that are in desperate need for capacity increase then I’m all go for it.

    O2 have great offers on paper but from a usage aspect, speeds are absolutely dire.

    1. Buggerlugz says:

      Isn’t that the case with all of them?

    2. Mobile Network Operator Design/Build Engineer says:

      Why is a it a problem in Chester but nowhere else? You would have thought fibre was available there from BT?

      We used to order hundreds of BT fibre circuits it only cost about 7K per-end book price (under 35Km limitation) to a local data centre, minus your network operator bulk discount pricing.

      BT refused to serve us initially, picking up that we were using it as mobile backhaul (we indeed were) and we were technically not recognised as an ISP, but as mobile data is Internet we argued this and they let us have it. That was going back a few years mind!

      Where I am, also near Chester, starting around 3:15pm Mon-Fri you can’t even send an instant message on O2 until later on in the day or until you move somewhere else. It does urgently need looking at but they just won’t hire the skill (me!) to deal with the problems. Their web checker says there is never a fault in the area.

      We used to do everything, leased lines, microwave links, interconnects, switch config, cellsite performance data analysis, databuilding sites, building MPLS/IP routes, upgrading data centres. Absolutely loved the industry was happier doing that job than I’d feel winning the lottery.

      Now they made everyone in the UK with a brain redundant and use teams of Indians instead. And you all wonder why its DIRE? There is absolutely no skill remaining that’s why!

      I now provide my services to a company who appreciates it. Mobile companies upper management is the entire problem. No vision from those dinosaurs and cavemen. They think hiring micro companies existing of clusters of ex-employees is the answer when that’s been proven to be an utter joke. There’s no pride or loyalty and none of the suppliers give a monkeys anymore as they get treated so badly from the operators. What a disaster.

    3. CarlO says:

      Well I complained to O2 about the constant congestion here and they said they are aware as a city it is really bad but there are no immediate plans to fix it.

      They just offered me to leave penalty free instead of fixing an acknowledged problem. It’s probably cheaper for them to allow people to leave than it is to repair. This is what Three were initially doing.

      As for the comment about good on paper only, the other 3 main networks perform pretty well, even Vodafone from the same mast, albeit they have around 50% less custom than O2 which absolutely shows when performance is compared.

  5. adslmax says:

    o2 are very poor speed on mobile! I can understand why virgin media no longer with EE because EE are very expensive for unlimited data plan capped to 1000GB usage policy

    1. Damien says:

      No, VM are no longer with EE because EE is owned by BT and BT are a competitor..

      If you are going to make up crap Phil – at least google some better crap first.

    2. Mike says:

      EE is expensive because you get what you pay for, good speeds.

  6. Meadmodj says:

    It is always interesting how these things are announced and how the stock market reacts.

    Yes they have a window of opportunity before the availability level of FTTP impacts Ultrafast however VM still have coverage areas of different vintage and the service delivery in some is very inconsistent or poor. It will not just be 3.1 and I haven’t seen much evidence of investment/maintenance in some older VM areas I have visited (nearly half way through 2021).

    OR has sat a alongside VM competition for quite a while now and only a smaller percentage of users will be after the higher speeds for the medium term. VM/O2 will no doubt create synergies but the Oomph bundles already include SIM offers.

    If they were reduce their pricing that might make a difference but that hits revenue so not likely.

    1. adslmax says:

      Damien

      READ MY POST AGAIN

      I did say VM are NO LONGER WITH EE

    2. CarlT says:

      Am aware of a number of plans to resolve those performance issues, some of which will ensure that the limitations of cable networks aren’t a problem again.

    3. AT says:

      To ADSLLMAX, That’s npt what you said, how I read it. Damien is correct in what he says.

  7. John Root says:

    Hard to believe that any good will come of this for shareholders (like my pension fund) or customers (me with Virgin Media and O2 subsidiary GiffGaff). No doubt a few employees will suffer with “synergy” apart from the top dogs who will need bigger bonuses for the increased responsibility (measured by turnover). “national connectivity champion” – the corporate bullsh*t (aka PR) is overwhelming the reality.

    It’s just greedy M&A, if the FT say otherwise, I’ll be very surprised.

  8. M&M says:

    Excellent all we need now are for Three and Vodafone to merge, then it’ll be a hat trick for the U.K. and the consumers will probably only lose out, still.
    But if by some miracle this deal does lead to O2’s extreme throttling being eradicated then it may be worth returning to Tesco Mobile.

    1. adslmax says:

      Three & Vodafone merge will never happen because they can’t risk smarty unlimited usage without any capped!

    2. Connor says:

      Vodafone is way too big for that to be allowed

  9. Sam says:

    Moved to O2 today on sim only, 4G speeds are dire.. 5G I got 260 meg. Wonder if virgin will improve 4G at all, EE 4G speeds are awesome, but I’ve found Vodafone 4G surprisingly good too…

    1. Gregowski says:

      Moved from EE to Vodafone because of very poor EE coverage around Southampton.

      Speeds on Vodafone are Excellent, so does on EE when I had coverage 😉

  10. Ig Og says:

    Bad decision. Avoid both.

  11. Roger_Gooner says:

    It will be a game changer if Liberty Global were to spin-off VM’s entire network (HFC and FTTP) to a subsidiary such as Virgin Media Networks Ltd with VM as the anchor tenant. VM’s network currently covers 15.5m premises with an average download speed of 174Mbps and all of it is due to be upgraded to DOCSIS 3.1 by the end of 2021, so other ISPs such as Sky Broadband would certainly be interested in launching products using this network especially if the network is aggressively expanded to compete with Openreach.

  12. Mike says:

    BT and Vodafone responsible for customer data theft by outsourcing customer services to Indian call centres to save money. On-line fraud and phone scams have increased due to data theft. Vodafone had an Indian CEO several years ago and again at present.

    1. G703 says:

      Bit racist.

    2. AT says:

      Modern day slave labour

    3. WFH says:

      Fair point on outsourcing that UK or EU data protection does not apply. The old get what you pay for. No cost to account for those decisions if the law does not apply penalties for data breaches. Offcom or CMA need to ensure that the customer has visibility of data protection by all suppliers involved. It’s not enough to point the finger at one Chinese vendor security risk. Buying technology on cost alone has always been a poor decision.

    4. Kevin says:

      I know a lot of companies that outsource abroad do audits all the time to make sure DPA laws are being followed. I highly doubt BT have had a major data breach at their Indian calls centres or else where. I know the TalkTalk incident a few years happened and they closed down their call centre very sharply and moved else where.

  13. Paul says:

    Will we see Virgin advertising their products in O2 stores seeing them come back to the high street. Much like EE and BT have done!

  14. Richard says:

    More consolidation means less choice for the consumer

    1. CarlT says:

      Not this time but, yes, inevitably. There are only so many providers a market can support and money talks.

      Hedge funds and investment houses are throwing insane amounts of money into FTTP in the UK anticipating consolidation.

      Build for £800 per premises passed, sell for £1.2k a year later, ka-ching.

  15. Alan says:

    I was with BT for decade!❤ lost when there the call in India rang me asking for a ransom on all my e-mails etc years of data import files etc. Will never trust them ever again. I got massively fleeced! Their just an other Avaricious plc!

    1. Meadmodj says:

      Scams can come from anywhere and you can’t blame a particular company or institutions for the criminals out there whether its BT, HMRC, DHL. If they appear to have good information about you they are just as likely to have gained it from elsewhere.

      The issue is we simply give too much information away in our daily lives which can now be easily collated together and we have ignored numerous technical solutions over the years that could have assisted. In addition our desire for flexibility has moved us to a world of anonymity giving away things like domain names, number recognition etc which we ought to be able to trust.

      If people get a cold call or email or text however plausible they must stop, think and verify.

    2. Meadmodj says:

      As for services (Mail, Cloud Storage etc). Anything valuable back up, keep encrypted and ensure there is a mechanism for close family in the event.

    3. CarlT says:

      People who actually have your data and want to ransom it don’t call you.

    4. Mike says:

      This has to be the dumbest comment ever posted on this site…

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