Virgin Media could be looking to merge with O2 to create a vast new mobile, internet and TV firm. According to sources speaking to The Guardian, the owners of Virgin Mobile and O2 – Liberty Global and Telefonica, respectively – are in talks to create a new joint venture that would unite its mobile networks, fibre broadband and television services. This new behemoth would challenge BT in terms of scope. The latter owns mobile firm EE, operates its own mobile network and offers broadband under its BT brand as well as Plusnet.
Although the telecom firms haven’t revealed the motivations behind the new joint venture, it would undoubtedly allow Virgin Media and O2 to fend off industry heavyweights. Not only BT, but also Sky – which offers a number of television packages, phone lines and fibre broadband options under its own brand, as well as contract-free streaming brand, NOW TV.
Virgin Media and O2 have declined to comment on the rumoured merger.
Unlike almost every other broadband provider available nationwide in the UK, Virgin Media does not use OpenReach infrastructure and uses its own fibre cables. This allows the company to provide much faster speeds. Indeed, Virgin Media’s Gig1 gigabit service offers faster speeds than the equivalent from BT, known as Full Fibre 1,000.
Bringing the option of bundling a fibre broadband to every O2 mobile user nationwide could dramatically boost the number of customers using the Virgin Media’s infrastructure. The same could apply with its paid-for television offering, which includes Sky Sports, Sky Cinema, and a number of other premium channels, including MTV, Comedy Central and others.
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Speaking about the merger, renown analyst Paolo Pescatore of PP Foresight told Express.co.uk: “This is an intriguing move. For sure, it is more likely to appease regulators than two mobile operators coming together. Also, let’s not forget the parents of both companies have been keen to offload these assets for a while.
“Therefore, there is more to this than simply convergence and competing with BT and Sky.
“Unfortunately, it won’t be as straight forward as that. In order to take Virgin Media TV, users will need to have a cable broadband subscription. All of this depends on coverage and footprint. In essence, it sounds great but this is one of hurdles as well as others. As O2 is mobile-only, it is highly likely most users have already signed up to a fixed-line service as well as TV with another provider.
“Ideally, the new entity will strongly need to consider a mobile-only TV service. Use this as an acquisition tool to cross-sell other services. Ultimately this will give scale and favourable terms with suppliers as well.”
The latest rumour is reminiscent of the merger between Orange and T-Mobile, which joined together to form Everything Everywhere (EE) and become one of the first networks to launch 4G speeds in the UK. EE is now owned by BT and was the first mobile network in the UK to bring 5G speeds to the UK.
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