Telefonica confirms it is in talks to merge O2 with Virgin Media in the UK
Telefonica has now confirmed that it is actively involved in early stage discussions with Liberty Global over the potential merger of their UK based assets
Spanish telecoms giant Telefonica has confirmed that it is in negotiations with Liberty Global over the potential merger of its respective businesses in the UK, namely O2 and Virgin Media.
Shares in Telefonica rose sharply on Monday as the company confirmed that it was in the process of discussing the potential merger with Liberty Global. Shares rose to €4.35 per share by 3pm (UAE time) on Monday.
The news will be a shot in the arm for Telefonica shareholders, who have seen the company’s share price struggle under the weight of its €37 billion debt pile. Over the course of the weekend, Luxembourg based telco Millicom announced that it would be pulling out of a deal to buy up Telefonica’s Costa Rican assets, in a deal that would have netted Telefonica $570 million.
The proposed merger in the UK would be beneficial for both parties, as they look to combine their sizable assets in the mobile and fixed line markets respectively. The pair are believed to be discussing the creation of a joint venture in which each partner would take a 50 per cent stake.
Telefonica previously considered selling O2 to rival mobile network operator Three UK for a price of over $10 billion back in 2016. The current discussions with Liberty Global are believed to value O2 at more than that figure.