Virgin Media/O2 merger on course for mid-2021, says Fries

The merger of Virgin Media and O2 is on course, Liberty Global CEO Mike Fries has said.

Writing to investors in the company’s year-end earnings, the chief exec said that “we are making very positive progress with the UK regulator on the joint venture between Virgin Media and Telefonica’s O2, and continue to anticipate a mid-21 closing.”

Fries said that the merger will create a “fixed-mobile champion” in the market, with many expecting the new-look company to emerge as a major competitor to BT/EE.

The £31 billion merger, announced in May of last year, will bring O2 and Virgin Media under one roof, and promises 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.

Fries’ statement of confidence comes after the UK Competition and Markets Authority outlined its concerns over the merger. While the operators have little crossover from a consumer perspective, the CMA highlighted a possible impact of the merger on the supply of wholesale mobile services to MVNOs and MNOs respectively. These MVNOs include Sky, which currently purchases wholesale mobile services from O2.

However, while noting that the merger could also “result in some horizontal overlaps and further vertical links”, these were not likely to be significant enough to warrant investigation.

Virgin Media ended the quarter with 3.498 million enhanced TV customers, with the operator overall seeing additions of 42,000 in the quarter. Virgin did however experience a negative churn of 27,500 enhanced video subscribers in 2020.