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By Paul Sandle and Clara-Laeila Laudette
LONDON/MADRID, May 20 (Reuters) - Britain's competition
regulator cleared a $44 billion merger between broadband company
Virgin Media and Telefonica's UK mobile network O2 on
Thursday, after a months-long review.
Virgin owner Liberty Global and Spain's
Telefonica, who agreed a year ago to forge a broadband and
mobile powerhouse to challenge market leader BT, hailed
the decision as "a watershed moment in the history of
telecommunications in the UK".
"We are reassured that competition amongst mobile
communications providers will remain strong and it is therefore
unlikely that the merger would lead to higher prices or lower
quality services," Martin Coleman of Britain's Competition and
Markets Authority (CMA) said.
The companies said the deal, which values O2 at 12.7 billion
pounds and Virgin Media at 18.7 billion pounds to give the new
group a combined value of 31.4 billion pounds ($44.4 billion)
including debt, is expected to close by June 1.
"We are now cleared to bring real choice where it hasn't
existed before, while investing in fibre and 5G that the UK
needs to thrive," Liberty Global CEO Mike Fries and his
Telefonica counterpart José Maria Alvarez-Pallete said in a
joint statement following the CMA approval.
The 50:50 joint venture, which will be led by Virgin Media
boss Lutz Schüler, will have 11 billion pounds of annual
revenue, the two owners said.
"For Telefonica, that's a big deal done," one financial
source told Reuters. "They're buying Oi in Brazil and need to
finalise that, but this would mean consolidating major presence
in the UK, Germany, Brazil and Spain."
The CMA had been concerned about the possible impact of the
merger on the British mobile market given that both companies
sold wholesale services to other operators.
However it gave the deal provisional approval last month
after concluding that other players offering rival services,
such as BT and Vodafone, would maintain competition.
Telefonica has been selling assets to cut debt, which stood
at 35.8 billion euros in this year's first quarter, and also
fund an upgrade to next-generation 5G networks while, like
European rivals, it tackles competition and the COVID-19 crisis.
($1 = 0.7079 pounds)
(Reporting by Pushkala Aripaka in Bengaluru, Clara-Laeila
Laudette in Madrid and Paul Sandle in London; Editing by
Subhranshu Sahu, Carmel Crimmins and Alexander Smith)
