November 5 deadline for Virgin Media/O2 merger EU approval

Left-right: Jose Maria Alvarez-Pallete; Mike Fries

The EU’s antitrust regulators have set a deadline of November 5 to decide on the proposed merger of Liberty Global’s Virgin Media and Telefónica’s O2.

First announced in May, the 50-50 merger promises to create a major competitor to UK market leader BT. It will combine the fixed line and TV offers of Virgin with the mobile operations of O2 in a deal valued at £31 billion.

With the deadline in place, the regulator will have just over a month to decide whether it will approve the deal with or without conditions. Alternatively, the EU can open a four-month long investigation should any major concerns appear.

Liberty and Telefónica have maintained confidence of the deal which is expected to deliver synergies valued at £6.2billion on a net present value basis after integration costs, and equivalent to cost, capex and revenue benefits of £540million on an annual basis by the fifth full year post-closing.

Any issues the regulator may have are unlikely to do with any sort of monopoly, as O2 and Virgin Media have very limited crossover in terms of business operations and functions.

Of the merger in May, Mike Fries, CEO of Liberty Global, said: “We couldn’t be more excited about this combination. Virgin Media has redefined broadband and entertainment in the UL with lightning fast speeds and the most innovative video platform. And O2 is widely recognised as the most reliable and admired mobile operator in the UK, always putting the customer first.”

Telefonica CEO, Jose Maria Alvarez-Pallete, said: “Combining O2’s number one mobile business with Virgin Media’s superfast broadband network and entertainment services will be a game-changer in the UK, at a time when demand for connectivity has never been greater or more critical.

“We are creating a strong competitor with significant scale and financial strength to invest in UK digital infrastructure and give millions of consumer, business and public sector customers more choice and value. This is a proud and exciting moment for our organisations, as we create a leading integrated communications provider in the UK.”