{"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 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’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