Virgin Media and O2 in a 50 50 merger
For O2 and Virgin Media customers the news today of a merger will bring lots of questions, but until the merger is all fully approved and completes things will continue as they did yesterday.
Telefonica and Liberty Global has reached an agreement where the UK operators of Virgin Media and O2 will merge in a 50/50 joint venture. O2/Telefonica has had a fixed network presence before in the UK but no where near the footprint of the Virgin Media cable network and Virgin Media while dallying with a virtual mobile network has not actually owned a mobile network. This will now all change and will make for an interesting convergence of fixed and mobile services.
The usual positive for the public from convergence of services is that billing drops from dealing with two firms to one and this can mean cheaper pricing. The negative side can be when people decide they want to break the bundle apart and this can be more complex.
The bigger picture seems to be that the push for converged platforms is going to be backed by £10 billion of investment over the next five years. No doubt this is going to be used to pay for a mixture of new converged products and expansion of the cable footprint and 5G outdoor footprint. With a fixed line provider on board who is already selling a 1.1 Gbps service and scope for higher speeds in the future it seems likely that we may see a low power 5G mmWave service in the home powered by a device plugged into the RFOG or DOCSIS 3.1 network.
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.Telefonica Chief Executive Officer, Jose Maria Alvarez-Pallete
We couldn’t be more excited about this combination. Virgin Media has redefined broadband and entertainment in the U.K. with lightning fast speeds and the most innovative video platform. And O2 is widely recognized as the most reliable and admired mobile operator in the U.K., always putting the customer first. With Virgin Media and O2 together, the future of convergence is here today. We’ve seen the benefit of FMC first-hand in Belgium and the Netherlands. When the power of 5G meets 1 gig broadband, U.K. consumers and businesses will never look back. We’re committed to this market and are right behind the Government’s digital and connectivity goals.Mike Fries, Chief Executive Officer of Liberty Global
There has been rumours of Liberty Global spinning off the RFOG element of the Virgin Media network and if that was still on the books we'd have expected to hear about that today. Prior to today though Virgin Media was set to be the dominant Gigabit supplier in the United Kingdom but the new 20 million FTTP target set by the BT Group has probably seen off any regulation pressure from Ofcom that might have surfaced in the next few years once 500 Mbps and Gigabit products become the bread and butter of broadband services.