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Are O2 and Virgin Media about to merge?

Telefonica, the parent company of mobile phone network O2, announced this morning that a rumoured merger with Virgin Media is being discussed. Here’s everything we know so far. 

A Telefonica filing with Spain’s market regulator confirmed that the company is in talks with Virgin Media parent company, Liberty Global (via ISP Review). It’s worth bearing in mind though that these are, at this stage, just talks. No merger is guaranteed.

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Were this merger to go ahead, it could have an interesting effect of the business landscape for UK mobile providers. Right now, O2 and Virgin Media are two of the more prominent mobile providers in the UK. Virgin Media holds 4% of the UK market, while O2 has a whopping 26% share.

In simple terms, the mobile operator that emerges from this possible merger could be the largest in the UK, if those market share portions remain the same and competition regulators allow any proposed deal to go through. The operators would hold 30% of the UK market, compared to the 28% BT/EE currently holds.

EE’s current, leading position is largely thanks to the company’s investment in 5G infrastructure. A merger between O2 and Virgin Media could help the companies boost their own 5G offerings.

If a merger between O2 and Virgin Media does go ahead, it could lead to some tantalising deals for customers as the larger company would be better able to take advantage of economies of scale – which could open up the ability to cut prices on mobile tariffs.

A previously rumoured merger between Vodafone and Virgin Media fell through, reminding us to take any rumoured merger with a pinch of salt.

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However, any potential deal is further complicated by the fact that Virgin Media already signed a deal with Vodafone. The five-year contract was set to see Vodafone take over Virgin Media’s mobile virtual network operator platform from EE / BT.

It may be costly to abandon this contract, (keeping Virgin Mobile as a part of Virgin Media) in order to deliver the discussed O2-Virgin merger. Watch this space for more updates.

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