Virgin Media and O2 merger will see one million more homes treated to broadband boost

Virgin Media and O2 merger will see one million more homes treated to broadband boost

04/10/2021

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Virgin Media and O2 are set to merge into a single company in the coming months. The deal, first announced by parent companies Liberty Global and Telefonica back in May 2020, is still pending regulatory approval from the Competition and Markets Authority (CMA), but there doesn’t seem to have any major snags on the horizon. In fact, both companies are so confident that everything will be rubber-stamped in good time that they’ve confirmed the name of the new CEO for the combined company.

Lutz Schuler, who currently leads Virgin Media in the UK, will become the Chief Executive Officer (CEO) of the combined Virgin Media-O2 company when the £31 billion merger completes. Elsewhere, Patricia Cobian, Chief Financial Officer (CFO) for O2, will become the CFO for the joint venture too.

Should the merger go ahead as planned, the new company has already pledged to invest £10 billion over the next five years. The cash is expected to be used to increase the 5G roll-out, which will become available to both Virgin Media and O2 customers, as well as expand super-fast broadband.

Virgin Media is already rolling out gigabit-capable broadband to towns and cities across the UK. These next-generation connections provide speeds up to 1,140Mbps. For comparison, the average home broadband connection in the UK right now is around 65Mbps.

Provided that Virgin Media and O2 get a thumbs up from the Competition and Markets Authority, the joint venture has now pledged to connect an extra one million homes to this gigabit-capable broadband “within 12 months of the merger closing”. Virgin Media alone has pledged to reach a target of 15 million homes by the end of this year, so this extra commitment could bring the total to 16 million by the end of 2021.

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The merged company has previously spoken about an “ambition to accelerate investments” and connect 7 million more homes to gigabit-capable broadband “in the coming years.” It’s unclear exactly where these homes would be – but it could see smaller towns and villages see these future-proofed connections start to come online.

In a joint statement about the appointment of the new CEO and CFO of the merged UK companies, Mike Fries, CEO of Virgin Media’s parent firm Liberty Global, and José Maria Alvarez-Pallete Lopez, CEO of O2 owner, Telefonica, said: “We are about to embark on an exciting new chapter for Virgin Media and O2, and Lutz and Patricia are the right leaders to deliver on our ambition to create the UK’s national connectivity champion.

“Together they will build a strong, diverse and dynamic team that will bring more choice, more value and world-class innovation to over 46 million fixed and mobile customers and the broader consumer and enterprise market. Lutz is a unique talent and a perfect fit for the new combined company. He has extensive experience in fixed and mobile and a fantastic track record at both Liberty and Telefonica driving transformation and growth.

“Together, Virgin Media and O2 will need to quickly capitalise on strategic opportunities in network expansion, digitalisation, convergence, 5G and video – all areas where Lutz has a strong background and a clear vision. We couldn’t have a better leader steering us through these critical and exciting times.”

It’s possible the merged Virgin Media-O2 will begin to allow other Internet Service Providers (ISPs) to use its fibre infrastructure to sell broadband to customers too. This would bring the new firm into direct competition with Openreach, which provides the cable infrastructure for BT, EE, TalkTalk, Sky and dozens more. Openreach has currently connected some 4.5 million premises with its gigabit-capable fibre broadband. Should Virgin Media reach its target, it will have 15 million homes connected to supercharged broadband.

The Competition and Markets Authority (CMA) is due to rule on the merger next month.

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