(Cybertech) – The merger between two of the UK’s biggest telcos has been confirmed – O2 and Virgin Media will become one company after the deal was approved by the Competition and Markets Authority (CMA).
O2 is the UK’s largest mobile network, with around 34 million customers. Virgin Media has over 5 million customers, but its fibre network is coveted.
First proposed around a year ago, the joining together of the UK’s biggest mobile network by customer base and the biggest cable provider hasn’t brought up the same issues that other mobile networks have faced when wanting to merge.
That’s because Virgin Media’s mobile business is run on a virtual network (MVNO) – it doesn’t hold any spectrum unlike BT/EE, O2 and Three. The businesses are broadly complementary unlike when O2 was the target of a £10bn takeover in 2015 by Hutchison-owned Three. The move blocked on the grounds of being anti-competitive as, after all, Three is a direct rival for O2.
However, the CMA did have concerns about the new deal that, “Virgin and O2 could raise prices or reduce the quality of these wholesale services [that it provides to other networks]. If this were to happen, it could lead to other companies being forced to offer lower quality mobile services or increase their retail prices which would negatively impact consumers.”
However, the CMA investigation concluded that the merger was unlikely to cause a price rise for consumers because there are plenty of other factors that go into a fee paid by a customer. There are also other companies that offer both leased-line services and mobile services, meaning that it was likely O2/Virgin would have to keep its prices as competitive as possible.
O2 owner Telefonica has been keen to pass O2 on for a while; after the failed Three deal it even thought about spinning O2 off as a public company in 2016. Now, O2 will join with Liberty Media-owned Virgin Media in a 50-50 joint venture.
Virgin uses Vodafone’s network to deliver its mobile services at present. That would, of course, change if it teamed up with O2.
O2 also has Tesco Mobile, Giffgaff and Sky Mobile running on its network as virtual networks (it owns Giffgaff and half of Tesco Mobile).
Writing by Dan Grabham.