Another major change may be imminent in the UK telecommunications market.
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The Spanish Telefonica and the media group Liberty Global are considering a merger of their British activities, as the Bloomberg news agency reported on Friday, citing persons familiar with the matter. Should an agreement be reached, this could be announced in the coming week
However, no final decision has yet been made. Negotiations could also fail or be delayed. A spokesman for the Spanish group, which plans to release its first quarter figures on May 7, did not comment on the information, Bloomberg said. Liberty Global could not be reached for comment. Telefonica Germany, the German subsidiary of the heavily indebted Spanish group, would not be affected by the possible transaction.
The merger could involve the UK mobile communications business (O2 UK) of the heavily indebted Spanish group and Liberty Global Virgin Media that offers telephone, television and internet services in the UK will be merged. With brands such as Tesco Mobile and Giffgaff with 34 million customers, O2 is the UK’s largest mobile operator. Virgin Media recently had 5.3 million customers.
Since O2 UK is the larger of the two companies, Telefonica is said to receive a compensation payment for this according to an “FT” report. The New Street Research analyst, which specializes in telecommunications and technology, believes that combining the two companies will reduce the combined costs by £ 5 billion. O2 UK could be valued at the equivalent of over £ 12 billion or around € 14 billion
The transaction could thus become the largest in the UK telecom industry since 2015, when former monopoly BT acquired EE for around £ 12.5 billion. EE had previously owned Deutsche Telekom and the French group Orange. Since then, Deutsche Telekom has held around twelve percent of BT shares.
Even if it’s speculation, a possible stock market transaction has been well received after Liberty Global’s New York stocks rose 15 percent after the Bloomberg announcement hit the market. And the Telefonica shares traded in the United States in the form of so-called depository receipts (ADRs) also rose significantly on Friday evening.
Experts have long been anticipating a new push by the Spaniards to find a solution for the British mobile communications business. In 2015 Telefonica had actually found a buyer with Chinese mobile operator Hutchison, which is already represented in Great Britain – but the deal, which was worth around 13 billion euros, was not concluded due to a veto by the European competition authority.
“We were very concerned that consumers would have had less choice and would have had to pay more to find a suitable cell phone package,” said Margrethe Vestager, the current EU Commissioner for Competition. Innovations and the expansion of the network infrastructure in the United Kingdom would also have been hampered.
Since the transaction now being propagated between Telefonica and Liberty Global would not be a merger of two mobile phone companies, at least no provider would disappear. In addition to O2 UK, the BT, the Hutichson division Three, Vodafone is still active.
/ nas / zb
LONDON (dpa-AFX)
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