Virgin Media and O2 confirm £31bn merger and it could mean lower prices for customers

VIRGIN Media and O2 have today confirmed they will merge to create a £31billion media and telecoms giant - and it could mean lower prices for customers.

It comes after O2's parent company Telefónica announced on Monday that the two firms were in talks to merge.

The deal brings together O2's 34million customers on its mobile network with Virgin's 5.3million broadband, pay-TV and mobile users.

O2 - which also provides the network for GiffGaff, Tesco Mobile and Sky Mobile - is the UK's largest phone company.

The deal will also see all 14,000 Virgin Media employees and 6,700 O2 staff in the UK work under the same umbrella company.

Both companies will remain separate until the merger gets the green light from regulators, which is expected to be in the middle of 2021.

If approved, the tie-up will create a major rival to BT by bringing together different platforms.

What does the merger mean for customers?

As the merger isn't set to go through until 2021, it won't have a direct impact on customers until then.

But it could mean lower prices for customers, thanks to the cost savings the two firms can make by merging.

Bosses behind the merger have also said it will speed up the rollout of 5G networks and high speed broadband to Brits across the country.

They said the tie-up means the firms will be better placed to compete with rivals, which should mean better value products and additional services and products.

This is thanks to O2 and Virgin Media's broadband, mobile and TV being "bundled" together in one place.

O2 told The Sun its networks for GiffGaff, Tesco Mobile and Sky Mobile customers are included in the merger, but it couldn't say how users will be impacted until the deal has been approved.

When BT and EE started merging their networks in 2018, existing customers weren't affected although they were encouraged to sign up for new deals.

For example, those who signed up to the new BT Plus service could get their broadband, internet and mobile bill in one place.

Holly Niblett, head of digital at Comparethemarket.com, said: "The merger between Virgin Media and O2 poses a major challenge to the dominance of BT in the UK and could shake-up the sector.

"Shared costs between Virgin Media and O2 should enable cost savings that, in an increasingly competitive market, may be passed onto customers as the big players battle for market share.

"BT could respond to this threat to its market-leading position by lowering prices, which would be good news for consumers."

Meanwhile, Ernest Doku, mobiles expert at comparison site Uswitch, said: "Both the O2 and Virgin Media brands are expected to remain in the short-term, but it will be interesting to see what this means for existing customers in terms of products and access to extra services, such as O2 Priority.

"Nevertheless, for all customers there is the exciting prospect of greater breadth of entertainment and faster speeds to look forward to."

Mike Fries, chief executive officer of Virgin Media owner Liberty Global, said: "We couldn't be more excited about this combination.

"Virgin Media has redefined broadband and entertainment in the UK with lightning fast speeds and the most innovative video platform.

"And O2 is widely recognised as the most reliable and admired mobile operator in the UK, always putting the customer first."

While Jose Maria Alvarez-Pallete, chief executive officer of O2 owner Telefónica, added: "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."

Telefónica has been looking for a buyer for O2 since 2016, when a planned take over by CK Hutchinson, the owner of mobile network provider Three, fell through after being blocked by European competition regulators.

The mobile network side of Virgin Media was due to be taken over by Vodafone later this year but it's not yet clear if this will go ahead following this latest deal.

Last week, a Virgin Media outage caused chaos for hundreds of thousands of users who rely on the network provider to work from home.

It's not the only network provider to suffer technical difficulties - earlier this year, Sky customers were furious after their broadband went down leaving them unable to work from home.

Broadband users won't get compensation for lost connections during the coronavirus crisis either, despite new rules introduced last year forcing firms to cough up.