Britain’s competition regulator on Thursday cleared a $ 44 billion merger between broadband company Virgin Media and UK mobile network Telefonica O2, after a months-long review.
The owner of Virgin Liberty Global and Spain’s Telefonica agreed to the merger a year ago, creating a broadband and mobile powerhouse to take market leader BT.
“After careful consideration of the agreement, we are reassured that competition between mobile communications providers will remain strong and it is therefore unlikely that the merger will lead to higher prices or lower quality services”, Martin Coleman of the Competition and Markets Authority (CMA) mentioned.
The companies said the deal, which values O2 at £ 12.7 billion and Virgin Media at £ 18.7 billion, to give the new group a combined value of £ 31.4 billion (44.4 billion dollars), including debt, is expected to be closed by June 1.
“This is a watershed moment in UK telecommunications history as we are now allowed to bring true choice where it did not exist before, while investing in fiber and 5G including the UK needs to thrive, ”said Mike Fries, CEO of Liberty Global and his Telefonica counterpart, Jose Maria Alvarez-Pallete, said in a joint statement following the CMA’s approval.
The 50/50 joint venture, which will be led by Virgin Media boss Lutz Schuler, will have £ 11 billion in annual revenue, the two owners said.
The CMA was concerned about the possible effects of the merger on the mobile phone market as the two companies sold wholesale services to other operators.
However, it approved the deal last month after concluding that the presence of other players in the market offering competing services, such as BT and Vodafone, would keep competition going.