Liberty Global and Telefonica announced an agreement to merge their operating businesses in the U.K. to form a 50:50 joint venture (the “JV”).
The combination of Virgin Media and O2 will create a nationwide integrated communications provider with over 46 million video, broadband and mobile subscribers and £11 billion of revenue.
There is an attractive valuation for both businesses, with O2 valued at £12.7 billion and Virgin Media valued at £18.7 billion, both on a total enterprise value basis. O2 to be transferred into the joint venture on a debt-free basis, while Virgin Media to be contributed with £11.3 billion of net debt and debt-like items.
By combining Virgin Media’s market-leading v6 video service and giga-ready broadband network, together with O2’s 5G ready mobile propositions, U.K. consumers will enjoy a superior connectivity and entertainment.
As a fully converged provider, the JV will provide more competition in the marketplace and choice for consumers.
In addition, the JV will become a leading challenger in the B2B space as the combination will accelerate the adoption of converged fixed-mobile services to Virgin Media’s and O2’s existing business customers and offer new services using both companies’ digital skills, networks and product portfolios, such as cloud, big data, Internet of Things and cybersecurity services.
