Liberty Global and Telefónica agree £31bn deal to merge UK groups O2 and Virgin Media

Liberty Global and Telefónica have struck a landmark deal to combine their British operations O2 and Virgin Media in a £31.4bn agreement that will reshape the UK’s telecoms market. Under the terms of the agreement, the companies will have equal ownership of O2 and Virgin Media and have built-in mechanisms for a potential float of the combined business in three years. The deal will also reshape the British telecoms sector by uniting the country’s second-largest broadband network with the largest mobile network, which has 26m direct customers and 34m non-direct clients, via brands such as Tesco Mobile and business users. It will also force rivals Vodafone, Sky, Three and TalkTalk to compete with two much larger telecoms companies. The joint venture company will be loaded with about £18bn worth of debt, which is typical of Liberty Global’s financing structures.