Tech

Great Britain: Telefónica plans to merge O2 with another network operator

Telefónica is in talks with the US company Liberty Global about a merger of O2 and Virgin Media in Great Britain. That reports the British Financial Times citing an opinion from the Spanish group. They were in one with Liberty Global, the owner of Virgin Media "Negotiation phase"an agreement is not guaranteed.

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However, according to people with direct knowledge of the situation to the Financial Times, a contract could be announced late this week as the two companies are already working out details of a planned 50:50 joint venture. Liberty Global is preparing to pay Telefónica compensation for the value of the two companies.

According to Deutsche Bank analyst Robert Grindle, Liberty Global Telefónica could pledge between £ 5 billion and £ 7.5 billion to offset the £ 12 billion net debt that weighs on Virgin Media. The bank values ​​Virgin Media at £ 15.5 billion and O2 at £ 11 billion, according to the Financial Times.

The negotiations will be led by Mike Fries, chief of Liberty Global, and José María Álvarez-Pallete, chairman of Telefónica.

Virgin Media owns and operates its own fiber optic cable network in the UK, which has a Fiber-To-The-Cabinet topology. Virgin Mobile Telecoms is a UK based Mobile Virtual Network Operator (MVNO) with no own network.

Liberty Global is disintegrating

Liberty Global, which is controlled by the US billionaire John Malone, is increasingly separating from its European network operators: In Austria, Liberty Global sold the cable network operator UPC Austria to Deutsche Telekom in December 2017 for EUR 1.9 billion. In May 2018, Vodafone had agreed with Liberty Global to take over their cable networks in Germany, the Czech Republic, Hungary and Romania for a price of EUR 18.4 billion. The Dutch cable business was merged with the mobile communications business from Vodafone to VodafoneZiggo. VodafoneZiggo is a combined cellular and TV cable network company. Liberty Global has also attempted to sell its Swiss division to Sunrise, but the contract has not materialized.

Virgin Media could offset its losses in the event of a contract with Telefónica against O2's profits.

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