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Virgin Media O2 commits £10B to covid recovery

One year after Virgin Media and O2 signed the biggest telecoms deal ever, the combined company has launched with big promises to invest in the coronavirus recovery.

The £31 billion deal, which was first announced in May 2020, faced scrutiny from the UK Competition and Markets Authority (CMA) over concerns that the combined company could raise prices or reduce the quality of services, upsetting the delicate balance of the mobile services marketplace and negatively impacting consumers. Yet having examined the evidence, the CMA dubbed the concerns unfounded and gave the deal the green light.

The joint venture between Virgin Media owner Liberty Global and O2 owner Telefónica is now set to provide a complete package of services, bringing full-fibre broadband, entertainment, TV and mobile services under one roof.

“We are ready to shake up the market and be the competitor the country needs at a time when choice has never been more important” said Lutz Schüler, chief executive of Virgin Media O2.

The planned shake up will require significant infrastructure upgrades, with Virgin Media O2 building on their existing fibre network to bring more speed and competition to areas across the nation, and installing 5G to around 200 towns and cities.

To this end, the combined company has committed £10 billion investment over the next five years, which is expected to create almost 2,000 new roles and 1,000 apprenticeships, along with contributing significantly to the government’s goal of rolling out superfast broadband to 85 percent of the country.

For the broader telecommunications market, the combined company could make a big splash, creating a stronger competitor for telecoms heavyweight BT, and sparking a new telecommunications rivalry that could stretch into the coming decade.

“The merger of Virgin Media and O2 is seismic for the UK telecoms market and will lead to some really interesting developments over the coming years. There is significant scope for M&A as the combined business divests non-core units and acquires to build on its already considerable strengths… watch this space!” says Marcus Allchurch, Partner at Acuity Advisors.”

MARCUS ALLCHURCH | Partner
Acuity Advisors

Marcus joined Acuity in 2014, before which he held senior leadership and corporate finance positions with some of the UK’s most successful advisory and telecoms businesses. Roles with EE, KPMG Corporate Finance and BDO Corporate Finance have seen Marcus work in the UK and across the globe with successful entrepreneurs seeking exit, and at board level with multi-national corporates looking for growth through organic and inorganic investment.

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