Telefonica and Liberty Global Plot Merger of O2 and Virgin Media

The UK may see some consolidation in the UK networking market, and it’s beyond the rumor stage. Telefonica has confirmed that it is in talks with Liberty Global to combine their respective UK operating companies into a larger, more competitive player.

Telefonica owns O2, the second largest UK wireless operator, while Liberty Global owns Virgin Media, which operates a cable footprint, a national fiber network and a wireless MVNO. The combination would, in theory, create a stronger competitor to both EE and Vodafone in the wireless space and to Sky in the pay-TV media space.

Telefonica has previously tried to combine O2 with the #4 wireless provider Three, but was blocked by regulators. The company’s large debt load has been driving them to monetize some assets and reduce exposure to thers while improving its balance sheet. Meanwhile, Liberty Global is always up for moving around infrastructure chess pieces in the European market. Virgin Media is their premier asset, but it could definitely do with some more wireless exposure.

But of course it’s just talks right now.  The two would have to find mutually agreeable terms, and then make nice with regulators as well.  

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Categories: Cable · Fiber Networks · Mergers and Acquisitions · Wireless