Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      19 June 2025

      WhatsApp founders hated ads – Meta is adding them anyway

      19 June 2025

      China’s car factories run cold as price war masks deep overcapacity

      19 June 2025

      Yellow Card, Visa in deal to hasten stablecoin uptake in Africa

      19 June 2025

      Jaltech backs solar firm Wetility in R500-million capital raise

      18 June 2025
    • World

      Trump Mobile dials into politics, profit and patriarchy

      17 June 2025

      Samsung plots health data hub to link users and doctors in real time

      17 June 2025

      Beijing’s chip champions blacklisted by Taiwan

      16 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Yahoo tries to make its mail service relevant again

      13 June 2025
    • In-depth

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025
    • TCS

      TCS+ | AfriGIS’s Helen Hulett on how tech can help resolve South Africa’s water crisis

      18 June 2025

      TechCentral Nexus S0E2: South Africa’s digital battlefield

      16 June 2025

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025
    • Opinion

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Sections » Mega merger is set to reshape Britain’s telecoms industry

    Mega merger is set to reshape Britain’s telecoms industry

    By Agency Staff7 May 2020
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Telefonica and Liberty Global have agreed to create the UK’s largest phone and Internet operator, a deal that threatens its rivals and marks another industry-defining merger for billionaire John Malone.

    The deal values the new company at £31-billion (R718-billion), with Telefonica’s O2 being valued at £12.7-billion and Liberty’s Virgin Media valued at around £18.7-billion. The companies, which started negotiations in December, said in a statement on Thursday there are £6.2-billion in synergies.

    The joint venture is a chance for both parent companies to rework two middling assets into a fully fledged competitor to BT Group in converged services, which combine fixed and wireless phone, broadband and television.

    The joint venture is a chance for both parent companies to rework two middling assets into a fully fledged competitor to BT Group

    Telefonica will receive an initial payment from Liberty Global of about £2.5-billion and another £5.7-billion in future recapitalisations, and both companies will have equal stakes in the new venture. Each company will name half of the eight-member board, which will have a chairman who will rotate every two years. The deal is set to be completed in mid-2021.

    The announcement is the latest deal for John Malone, Liberty’s billionaire chairman, who has been on a relentless M&A spree since selling cable provider Tele-Communications to AT&T for $48-billion in 1999. His track record took a knock late last year when his effort to sell UPC Switzerland for $6.4-billion fell apart.

    For Telefonica chairman Jose Maria Alvarez-Pallete, it’s also an opportunity to signal to investors he’s committed to restructuring the debt-laden company.

    Punished

    Investors have punished Telefonica stock since Pallete became chairman four years ago, as the Madrid-based company failed to deliver clear prospects for growth and cutting debt. The shares are down 30% so far this year, even after he introduced in November a strategy to focus on Spain, Brazil, the UK and Germany, which generate the bulk of sales, and place other Latin America activities into a separate division.

    By partnering with Liberty in the UK, Telefonica puts Vodafone Group in a difficult position. It deprives it of a potential partner which could have set it on the road to offering consumers fixed-line services wrapped into lucrative bundles at a national scale. And Virgin will no longer need to pay it for mobile wholesale access. That’s something Liberty would have needed to keep doing to capture potential new revenue streams from the next generation of wireless technology, such as the proliferation of smart devices. Analysts have not ruled out a fightback from the Newbury, England-based carrier.

    The tie-up comes at a crucial moment for Virgin. Rival BT is the only UK operator to own both a mobile and fixed network, and it’s been investing to upgrade to fibre-optic broadband. This threatens one of Virgin’s key selling points — the speed of its Internet services. It also gets a partner with significant experience in convergence and building and operating fibre networks.

    However, the merger means O2 can grow beyond the mobile-only market in which it currently operates.

    Telefonica was one of the first European carriers to make the shift to convergence: offering fixed- and mobile-phone services, along with broadband and television. The company is also Europe’s leading operator of fibre-optic broadband, a crucial type of infrastructure which the UK is still struggling to roll out.

    But it hasn’t always been able to take a leading market position with this know-how. In 2018 it was left as a mobile-only carrier in Germany, reliant on buying wholesale access from rivals in order to offer fixed and broadband services, after Liberty sold its cable business there to Vodafone.

    “The UK remains one of the most fragmented telecoms markets in Europe, and Virgin Media remains as one of the few standalone cable operators” without a mobile network operator, James Ratzer, an analyst at New Street Research, said in a 1 May note. “The opportunity for value creation through the combination of Virgin Media with either O2 UK or Vodafone UK is a pretty compelling one.”  — Reported by Rodrigo Orihuela and Thomas Seal, (c) 2020 Bloomberg LP



    BT Group John Malone Liberty Global O2 Telefonica top Vodafone
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleBusiness calls for lockdown to be eased urgently
    Next Article Twitch eyes expansion into original programming

    Related Posts

    MTN CEO edges Vodacom rival in pay stakes – but just barely

    18 June 2025

    Vodacom appoints new CEO to lead international markets

    3 June 2025

    Vodafone CFO to step down

    7 May 2025
    Company News

    Disrupt first, ask questions later – the uncomfortable truth about incident response

    18 June 2025

    Sage brings together HR leaders to explore the future of payroll and people management

    18 June 2025

    Altron: a brand journey, a birthday celebration and a bet on Joburg’s future

    17 June 2025
    Opinion

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    AI and the future of ICT distribution

    16 June 2025

    Singapore soared – why can’t we? Lessons South Africa refuses to learn

    13 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.