O2 and Virgin Media will complete their £ 31 billion merger by June 1 after the deal receives final approval from UK competition authorities.
The combination of O2’s mobile network and Virgin Media’s wired infrastructure will immediately create one of Europe’s largest telecommunications organizations, powering the communications of nearly 40 million subscribers.
The consolidation would also result in savings of £ 6.2 billion and provide the scale and ability to compete with BT and Vodafone in converged network services.
Parent companies Liberty Global and Telefonica have pledged to create 4,000 jobs and 1,000 apprenticeships if they receive regulatory approval and pledged to increase the combined company’s gigabit broadband footprint by an additional million premises, this which brings the total figure to 16 million, within 12 months of the merger.
There are also promises to add an additional seven million homes to “ gigabit networks ” and to cover more than 100 cities by the end of 2021.
The green light was expected after the Competition and Markets Authority (CMA) said last month it could find no reason to block the deal. Its investigation was not concerned about the potential impact on the consumer market given the complementary customer bases of the two companies, but rather a negative effect on the wholesale market.
Formal approval means that all regulatory conditions are now met.
“O2 and Virgin are major service providers to other businesses serving millions of consumers. It was important to ensure that this merger did not make these people worse. That’s why we conducted a thorough investigation, ”said Martin Coleman, chairman of the CMA commission of inquiry.
“After taking a close look at the agreement, we are reassured that competition between mobile communications providers will remain strong and therefore the merger is unlikely to lead to higher prices or lower quality services.
The joint venture has already started building its management team, with Virgin Media CEO Lutz Schüler and O2 CFO Patricia Cobain retaining their roles within the extended entity.
“This is a watershed moment in UK telecommunications history as we are now allowed to bring real 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 José Maria Alvarez-Pallete, CEO of Telefonica. “We thank the CMA for conducting a thorough and effective review. Lutz and Patricia are now set to take the reins and launch a National Connectivity Champion that will connect more people, jump-start more businesses, and power more communities for the greater good.