Merged Broadband and Mobile Giant Virgin Media O2 Launches

Following last month’s approval by the UK Competition and Markets Authority (CMA) and the full completion of its £31bn merger, a “new” UK company called Virgin Media O2 (VMO2) was officially launched today that has combined the fixed line broadband, phone, TV and mobile network businesses from both operators.

The announcement confirms everything that we’ve already reported (here) and so doesn’t add much in the way of new information, except for confirming that the new branding will retain the name of both operators as part of their 50:50 Joint Venture.

The new business instantly becomes one of the UK’s largest, with 47 million customers (broadband, mobile, TV and phone), 430 retail stores and 18,000 employees, as well as reported equivalent revenues of £11bn last year. The new company has once again reiterated its plan to take on BT (EE) and “upgrade the UK” through a £10bn investment (capex) in fibre and 5G infrastructure over the next 5-years.

“Building on the success of its existing fibre network expansion activity, the business is planning to go further and faster by deploying fibre to millions of additional homes across the country. A variety of options, including potential partnerships, are currently being worked on to achieve this,” said VMO2’s statement.

The new statement is fairly light on detail, although they’d previously talked about a plan to expand their gigabit-capable broadband network (via FTTP) to reach an extra 1 million premises “within 12 months of the merger closing” (total of c.16 million) and held an “ambition” to then connect a further 7 million homes. Meanwhile, their 5G rollout is expected to be available in c.200 UK cities and towns by the end of June 2021.

Lutz Schüler, CEO of VMO2, said:

“With the fastest broadband and most reliable mobile network in the UK today, Virgin Media O2 is the complete package.

We are ready to shake up the market and be the competitor the country needs at a time when choice has never been more important. Through investment and innovation in cutting-edge infrastructure and future technology, we will connect more people to the things they love, support communities across the country, help businesses to grow, and power the UK economy.

With no limit to our ambition, we’re here to upgrade the UK – and our mission starts today.”

As we’ve said before, O2’s mobile network will not be able to take over on the Virgin Mobile side immediately because Virgin Media had already signed a new MVNO deal to swap from EE to Vodafone – that agreement will need to run its course for the next few years. However, this has some benefits as it often takes several years to develop fully converged solutions, much as BT and EE showed with their merger a few years ago.

In terms of their fixed line expansion, Lutz Schüler has also made no secret of his desire to take on Openreach at the wholesale level, which could open their broadband network up to rival ISPs (e.g. Sky Broadband). However, it remains to be seen precisely how this ends up being structured, such as whether they only wholesale the newer FTTP part of their network or their existing Hybrid Fibre Coax (HFC) side too.

Openreach are of course now planning to deploy FTTP out to 25 million premises by December 2026 (currently at 4.8 million), so they’ll catch up eventually. But in the meantime, VMO2’s gigabit-capable network is already available to well over 15 million homes and that will thus be very attractive to other ISPs at wholesale.