O2–Virgin Media gets one step closer as EC sets deadline day

Back in May, Telefonica announced that it would be merging its UK business, O2, with the fixed broadband provider Virgin Media, in order to take on the hegemony of incumbent BT.

The enormous deal, valued at nearly $40 billion, is expected to cause enormous upheaval in the UK telecoms sector, creating a converged operator with synergies valued at around £6.2 billion over five years. Both Virgin and O2 will own 50% of the joint effort.

Today, the merger is one step closer to reality, with the EC setting a provisional deadline of the 5^th of November to complete its review of the merger. If a decision cannot be reached by this time due to major concerns, the EC can opt for a four-month extension to the review period.

There is some complications here around exactly who should assess the merger, with the UK’s Competition and Markets Authority arguing that they should ultimately hold sway over the deal, since it only directly affects the UK market. They also point out that the deal will theoretically close after the UK has left the EU at the end of 2020.

But regardless of who ultimately clears the deal, the companies involved remain positive that the match-up will boost competition in the UK.

Speaking at Total Telecom’s Connected Britain event last week, Virgin Media CEO Lutz Schuler said the deal would be “good for the country” and would ultimately allow Virgin Media to become “the national champion in quadplay”, offering mobile, video, fixed voice, and broadband services.

Assuming no further investigation is warranted, the deal is expected to close in mid-2021.

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