O2 and Virgin Media have confirmed that they plan to become one giant media platform in a £31 billion merger that is expected to be completed by the end of 2021.
Touted as a 50-50 joint venture the deal will see the UK’s largest mobile platform O2 merge with the UK’s biggest cable company Virgin Media. The plan is to create a media entity that can challenge the UK’s largest market competitors Sky and BT.
Once merged this new media firm will have over 46 million customers and a revenue of £11 billion.
Telefonica Chief Executive Officer, Jose Maria Alvarez-Pallete, commented that: “Combining O2’s number one mobile business with Virgin Media’s superfast broadband network and entertainment services will be a game-changer in the U.K., at a time when demand for connectivity has never been greater or more critical.”
“We 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. This is a proud and exciting moment for our organisations, as we create a leading integrated communications provider in the U.K.”
The deal is expected to be completed during the course of next year. Crucially the merger is still subject to regulatory approvals.
Virgin Media and O2
Upon completion of the deal the new media platform is proposing to invest £10 billion into the UK market over the next five years.
Currently Virgin Media is owned by Liberty Global, which also owns 10 percent shares in ITV. While O2 is operated by the Spanish telecommunication firm Telefonica.
Mike Kiersey, Principal Technologist at Boomi, told Computer Business Review that: “The success of this merger will hinge on several factors, most notably the operating model (absorption, standalone or merger of equal), alignment to the business intent and the process to execute the merger. To establish an efficient operating state, a clear integration framework must be put in place, whether that means the entities remain separate or embrace a purely integrated approach. In most cases, a symbiosis of both IT departments will be the likely result.”
“Business integration needs to be swift, broken down into manageable chunks and with seamless application and data integration for all employee, partner, and customer services. In this way, data points become more accessible and clear, united by a master data management solution able to cross departmental and geographic borders in an agile yet controlled manner.”