A merger proposal by O2 and Virgin Media has been provisionally approved by the competition watchdog, opening the doors to a new network provider that would rival BT in size.
The CMA launched an investigation into the merger in December 2020, raising concerns that the deal would result in both networks raising prices for services such as wholesale ‘leased lines’, or withdrawing them completely. This could consequently lead to rival firms raising their own prices which would drive consumers to Virgin and O2.
The CMA’s investigation concluded that the merger is ‘unlikely to lead to any substantial lessening of competition’, though Virgin and O2 would need to keep their services competitive ‘to maintain this business’.
As it stands, the merger will subsequently create a huge telecoms and entertainment firm that could rival BT, which owns the mobile network EE. O2 currently has over 32 million mobile phone subscribers with Virgin having around 3 million mobile users in addition to 6 million broadband and TV subscribers. O2 also provides the network infrastructure for Tesco Mobile, Giffgaff and Sky Mobile.
Of the merger, Martin Coleman, CMA panel inquiry chair said: ‘[It] is unlikely to lead to higher prices or a reduced quality of mobile services - meaning customers should continue to benefit from strong competition’.
According to Ernest Doku, mobiles expert at service comparison website Uswitch, the deal could be completed by the summer of 2021. He added that the merger ‘could mean a greater choice of entertainment and faster speeds’ for consumers, but ‘it’s vital that the combined brands maintain the high standards of service that customers have come to expect’.
You can find more information about the CMA’s investigation of the merger here.