Liberty Global CEO Mike Fries said that a merger of its Virgin Media UK brand with Telefonica’s local mobile operator O2 was on track to be completed this year, citing positive progress being made with regulators.
The executive noted the transaction was expected to meet its estimated closing date of mid-2021 and would create a “fixed-mobile champion” in the market.
The deal, announced in May 2020, is currently being analyzed by the U.K. Competition and Markets Authority. The regulator is assessing any potential negative impacts on the country’s wholesale telecoms and consumer markets.
“I’m happy to report that the regulatory review of the joint venture we announced last May between Virgin Media and Telefonica’s O2 is right on track. We’ve been heavily engaged with the CMA and feel really positive about a midyear approval,” Fries said during a conference call with investors.
Telefonica CEO, Jose Maria Alvarez-Pallete, previously said that “combining O2 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.”
Telefonica and Liberty Global had said they will ensure that the JV will benefit from the scale and complementary expertise of each partner. To accomplish that objective, the parties had agreed to provide a suite of services to the JV after closing. These services will principally consist of IT and technology-related services, procurement, brand management and other support services.
The two firms also said that the JV is expected to generate significant operating benefits, with estimated run-rate cost, capex and revenue synergies of £540 million on an annual basis by the fifth full year post closing. The key expected sources of cost and capex synergies include the use of existing infrastructure to provide services for each entity’s customers at lower cost compared to standalone capabilities and the migration of Virgin Media mobile traffic to Telefonica UK’s network, among others.
Also in 2020, Liberty announced the acquisition of Swiss telecommunications operator Sunrise.
According to Liberty Global, the purchase of Sunrise would result in a combined business with about $2.6 billion in revenue, 2.1 million postpaid mobile subscribers, 1.2 million broadband subs and 1.3 million TV subscribers — which it says is about 30% market share in each segment.
Liberty had operations in the Swiss market via its UPC Switzerland cable operator.
“Like Switzerland, everything we’ve learned in the meantime just reaffirms our confidence in this combination financially and operationally. As reported, the Swiss and U.K. deals together represent about $12 billion of synergies on an NPB basis, and that’s at today’s FX rate, around 65% of which should accrue to us,” Fries said.
