{"id":21175,"date":"2020-05-07T10:57:42","date_gmt":"2020-05-07T10:57:42","guid":{"rendered":"https:\/\/www.mobileworldlive.com\/?p=280224"},"modified":"2020-05-07T10:57:42","modified_gmt":"2020-05-07T10:57:42","slug":"telefonica-liberty-global-agree-massive-uk-merger","status":"publish","type":"post","link":"https:\/\/itteacheritfreelance.hk\/wordpress\/index.php\/2020\/05\/07\/telefonica-liberty-global-agree-massive-uk-merger\/","title":{"rendered":"Telefonica, Liberty Global agree massive UK merger"},"content":{"rendered":"

<\/p>\n

\tTelefonica and Liberty Global agreed a blockbuster deal to merge UK mobile operator O2 with fixed provider Virgin Media and pump \u00a310 billion into the market over five years, drastically stepping-up competition to BT.<\/p>\n

The deal, which is subject to regulatory approval, is expected to create synergies of \u00a36.2 billion within five years of closing, after integration costs of \u00a3700 million. Savings are to come from cutting wholesale charges; combining IT, marketing and administration costs; and \u201csite rationalisation\u201d.<\/p>\n

Once complete, the combined entity will have an enterprise value of almost \u00a331.5 billion, with Telefonica and Liberty Global each holding a 50 per cent stake.<\/p>\n

The parent companies expect to receive cash from the deal by taking on debt: Telefonica anticipates banking \u00a35.7 billion including a \u00a32.5 billion \u201cequalisation payment\u201d from Liberty Global which, in turn, predicts booking \u00a31.4 billion.<\/p>\n

After completion Virgin Media\u2019s MVNO customers will be migrated to the combined entity\u2019s mobile infrastructure, a blow to rival Vodafone UK [1] which promoted winning the contract to take over hosting the service from BT in 2019. Details of what happens to this agreement, which was meant to be active in 2021, were not disclosed.<\/p>\n

Converged competitor
\nThe merger, first rumoured late last week [2], significantly increases competition in the UK telecommunications sector with currently only incumbent BT able to provide fixed, TV and mobile through its own infrastructure.<\/p>\n

Telefonica CEO Jose Maria Alvarez-Pallete said the deal would be a \u201cgame changer\u201d for the UK market: \u201cWe are creating a strong competitor with significant scale and financial strength to invest in UK digital infrastructure and give millions of consumer, business and public sector customers more choice and value.\u201d<\/p>\n

Mike Fries, chief of Liberty Global, highlighted the benefits fixed-mobile convergence had delivered in Belgium and the Netherlands: \u201cWhen the power of 5G meets 1GB broadband, UK consumers and businesses will never look back.\u201d<\/p>\n

Analysis
\nFor Kester Mann, director, consumer and connectivity at CCS Insight, the \u201cmerger will transform the UK telecoms landscape\u201d.<\/p>\n

He noted the UK market had been \u201cripe for further consolidation since BT\u2019s acquisition of EE [3] in 2016\u201d, with the combination of O2 with Virgin Media \u201ca natural fit\u201d because it offers the parent companies \u201ccrucial assets\u201d they lacked in terms of mobile and fixed infrastructure.<\/p>\n

However, Mann told Mobile World Live Vodafone\u2019s UK business rather than BT appeared to be the biggest loser, with the tie-up laying bare \u201cits weak position in the market for converged services\u201d.<\/p>\n

CCS Insight doesn\u2019t expect any regulatory hurdles \u201cas the deal does not create a significantly stronger player\u201d in fixed and mobile markets: \u201cThe greatest challenges will arise after the deal completes. In particular, the new unit will need to dig deep to fund the costly expansion of cable and 5G services throughout the UK.\u201d<\/p>\n

If approval is forthcoming, the companies expect to close in mid-2021.<\/p>\n

New ground
\nIn addition to the consumer market, Telefonica and Liberty Global pointed to a renewed push into the B2B sector, with plans to expand their offerings into areas including cloud, big data, IoT and cybersecurity.<\/p>\n

The combined subscriber base as of the end of 2019 was 46 million with annual revenue of \u00a311 billion.<\/p>\n

[1] https:\/\/www.mobileworldlive.com\/featured-content\/top-three\/vodafone-scores-win-over-bt-with-uk-mvno-deal\/
\n[2] https:\/\/www.mobileworldlive.com\/featured-content\/home-banner\/telefonica-talks-uk-deal-with-liberty-global\/
\n[3] https:\/\/www.mobileworldlive.com\/featured-content\/home-banner\/bt-moves-fast-on-12-5b-ee-deal-following-cma-green-light\/<\/p>\n\n

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Telefonica and Liberty Global agreed a blockbuster deal to merge UK mobile operator O2 with …<\/p>\n

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