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The new mega merger between parent groups Liberty Global and Telefonica will be stiff competition for other UK media companies such as Sky and BT as it will provide “all-in” packages to customers which other networks are unable to offer.
Liberty Global and Telefonica, the owners of Virgin Media and O2 have announced plans to bring O2’s 34 million mobile phone customers and Virgin’s 5.3 million broadband, pay-TV and mobile users together in a £31 billion mega-merger deal.
The 50-50 joint venture is expected to be complete by next year, as it is subject to regulatory clearances.
The new company will challenge BT and Sky by offering consumers competitive bundles of TV, mobile and broadband packages and will have 46 million customers and £11bn in revenue.
Mike Fries, Chief Executive Officer of Liberty Global, said, “We couldn’t be more excited about this combination. Virgin Media has redefined broadband and entertainment in the U.K. 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”.
Jose Maria Alvarez-Pallete, CEO of O2 owner Telefonica, 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”.
The new company will invest £10bn in areas such as gigabit-speed broadband and 5G networks.
As reported in The Guardian, Philip Jansen, the chief executive of BT said the introduction of a new power player in the market would not make BT speed up its own investment plans.
“We are not going to go any faster”, he said. “We have a comprehensive five-year plan. This deal is not a surprise, I think the industry needs consolidation. It follows our strategy four years ago [buying EE]. Competition is good, it drives innovation”.