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(Alliance News) - Liberty Global PLC on Thursday confirmed it has agreed to merge its Virgin Media unit with Telefonica SA's UK telecommunications unit O2 in a deal worth more than GBP31 billion.
Liberty and Telefonica each will own 50% of the joint-venture which is expected to be completed in 2021.
The duo labelled it an "attractive valuation for both businesses", with O2 valued at GBP12.7 billion and Virgin Media, also UK-based, valued at GBP18.7 billion.
"Joint venture expected to deliver substantial synergies valued at GBP6.2 billion on a net present value basis after integration costs, and equivalent to cost, capex and revenue benefits of GBP540 million on an annual basis by the fifth full year post-closing," Liberty and Telefonica said in a joint statement.
Its a deal that has been teased over recent days, with Telefonica on Monday confirmed that it was in talks with Liberty over combining their UK mobile operators.
Telefonica said at the time, in response to press reports, the process is currently in "a negotiation phase", and it is not able to guarantee the precise terms or probability of the success of the talks.
Last Friday, Bloomberg News first reported the potential deal to unite Telefonica's O2 wireless unit and Liberty Global's Virgin Media business.
It will produce a stronger rival to Vodafone Group PLC and BT Group PLC's EE mobile carrier.
"Combining O2’s number one mobile business with Virgin Media's superfast broadband network and entertainment services will be a game-changer in the UK, at a time when demand for connectivity has never been greater or more critical," Telefonica Chief Executive Officer, Jose Alvarez-Pallete said.
His counterpart at Liberty Global Mike Fries said: "We couldn't be more excited about this combination. Virgin Media has redefined broadband and entertainment in the UK 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 UK, always putting the customer first. With Virgin Media and O2 together, the future of convergence is here today."
The news came in the wake of Liberty Global reporting its first quarter results.
In the three months to March 31, revenue inched 0.3% higher annually to USD2.88 billion from USD2.87 billion.
Operating income meanwhile more than doubled to USD280.6 million from USD105.5 million a year before.
The telecoms firm reported it had a net loss of 18,900 customers, dramatically worsened from 1,700 over the same period last year.
By Eric Cunha; ericcunha@alliancenews.com
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