Well that escalated quickly. Just days after rumours emerged of Virgin Media and O2 teaming up to create a new TV and mobile service in the UK, the owners of the two media giants have confirmed the partnership.
Liberty Goal, the telecomms company that owns Virgin Media, and O2 owner Telefonica have outlined details of the planned 50-50 joint venture, which has been valued at over £31 billion and is expected to be finalised in the middle of 2021.
The mega-merger will create a new communications provider that combines Virgin Media’s v6 video service and giga-ready broadband with O2’s 5G-ready mobile solution, bringing together over 46 million video, broadband and mobile subscribers.
With plans to invest £10 billion in the UK over the next five years, the converged platform should be in a strong position to challenge media giants Sky and BT (which owns EE) in the UK. After all, Virgin has been heavily investing in widening its speedy broadband coverage while O2 continues to bulk up for wider 5G adoption.
Unsurprisingly, Virgin Media mobile customers will be moved across to Telefonica UK’s network. And it would seem likely that O2's existing provisions to other services, including and especially Sky Mobile, would terminate under the new partnership. The venture also threatens Vodafone's agreement with Virgin to take over Virgin's mobile customer base from next year until 2026.
If competition authorities allow the deal, which is likely in light of BT and EE's merger in 2016, it will create a multimedia business with annual revenues of over £11 billion.
The document doesn't detail whether the deal will affect ITV, of which Liberty Goal owns a 10 per cent stake.