The two companies will form a 50:50 joint venture, which Liberty Global and Telefonica hopes will become an internet and mobile powerhouse as demand for super-fast broadband grows and 5G rolls out across the UK.
In a joint statement, Liberty Global and Telefonica said they expect to complete the merger by the middle of next year, subject to regulatory approval.
The combined companies will have 46M video, broadband and mobile subscribers in the UK, while their joint revenue is worth £11B. The merger will create savings of £6.2B, mainly from reducing capital expenditure.
Telefonica CEO Jose Maria Alvarez-Pallete said: “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.”
Liberty Global chief executive Mike Fries added: “With Virgin Media and O2 together, the future of convergence is here today… When the power of 5G meets 1 gig broadband, UK consumers and businesses will never look back. We’re committed to this market and are right behind the Government’s digital and connectivity goals.”
Liberty Global acquired Virgin Media for £15b in 2013. Malone’s company also co-owns UK production giant All3Media with Discovery.