{"id":27092,"date":"2021-05-20T09:34:18","date_gmt":"2021-05-20T08:34:18","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=27092"},"modified":"2021-05-20T09:52:13","modified_gmt":"2021-05-20T08:52:13","slug":"competition-authority-clears-o2-and-virgin-media-uk-to-merge","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2021\/05\/competition-authority-clears-o2-and-virgin-media-uk-to-merge.html","title":{"rendered":"Competition Authority Clears O2 and Virgin Media UK to Merge"},"content":{"rendered":"

As expected the UK Competition and Markets Authority<\/a> has today given their final clearance, without remedies, for cable broadband and TV provider Virgin Media<\/a> (Liberty Global) and mobile operator O2<\/a> (Telefonica) to complete their \u00a331bn merger (50:50 Joint Venture). A major full fibre and 5G<\/a> rollout boost is anticipated.<\/p>\n

The news, which ensures that the transaction will now definitely close by 1st June 2021<\/strong>, is expected to deliver substantial net synergies valued at \u00a36.2 billion and create a “national connectivity champion<\/em>” with \u00a311bn of revenue, 46 million mobile, home and business connections. Not to mention the \u00a310bn<\/strong> of planned capital expenditure over the next 5 years.<\/p>\n

NOTE:<\/strong> The CMA’s final decision is virtually identical to their provisional one (here<\/a>), so we won’t repeat that today.<\/div>\n

The capex investment will be used to help acceleration the deployment of ultrafast 5G<\/a> 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<\/em>” (total of 16 million).<\/p>\n

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

Mike Fries, CEO of Liberty Global, and Jos\u00e9 Maria Alvarez-Pallete, CEO of Telefonica, said:<\/strong><\/p>\n

“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\u2019t existed before, while investing in fibre and 5G<\/a> 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.”<\/p><\/blockquote>\n

Admittedly it’ll take a bit longer than usual for O2<\/a>’s mobile network to take over from Vodafone<\/a> as Virgin Mobile’s current MVNO supplier because that deal still has another 4-5 years to run. But as the merger between EE<\/a> and BT<\/a> 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.<\/p>\n

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<\/a>), which would place them into direct competition with Openreach<\/a> (BT<\/a>) at a much bigger level. Such a change would represent a seismic shift in the UK broadband market and give Virgin Media<\/a>\u2019s network a new lease of life for future support and upgrades.<\/p>\n

Openreach<\/a> are of course planning to deploy FTTP<\/a> 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<\/a>’s gigabit-capable network is already available to well over 15 million homes and that will thus be very attractive to other ISPs.<\/p>\n