Telefónica and Liberty Global have closed the merger of their businesses in the United Kingdom through a ‘joint venture’ owned 50% by both companies, called VMED O2 UK , in an operation that reduces the net debt of the Spanish operator by 5,000 million euros .
The operation has been completed once the pertinent regulatory approvals have been obtained , the necessary recapitalizations carried out and the rest of the conditions agreed for its closure have been fulfilled, as reported by Telefónica to the National Securities Market Commission (CNMV).
The Spanish company has highlighted that the constitution of this ‘joint venture’ provides a “very significant” value for Telefónica both from a business and financial perspective, and funds of 5,500 million pounds (6,398 million euros), of which 2,700 million pounds (3,140 million euros) correspond to Liberty Global’s cash payment to Telefónica to offset the stake in the joint venture and 2,800 million pounds (3,257 million euros) correspond to gross funds from recapitalizations.
Fixed and mobile services
In May 2020, the date on which the transaction was announced, both companies highlighted that it was an operation created by the “leading” market operator of fixed and mobile services in the country .
“The combination of both companies will result in a stronger integrated fixed and mobile service provider in the UK market, which will drive the expansion of Virgin Media’s high-speed network and the deployment of O2’s 5G network, to the benefit of customers. , private companies and the public sector, “they remarked at the time.
As indicated, neither Telefónica nor Liberty Global will consolidate the results of the joint venture in their respective accounts after the closing of the operation. The ‘joint venture’ intends to distribute, periodically, the cash available to its partners, as well as carry out new recapitalizations, also periodically, subject to operating and market conditions.
The new converged platform creates a nationwide integrated telecommunications provider in the UK with more than 46 million video, broadband and mobile subscribers and revenues of 11 billion pounds (12,799 million euros).
The new platform will put the customer at the center of its strategy and will have the scale to innovate in a changing digital environment, investing 10 billion pounds (11.636 million euros) in the UK over the next five years.
Telefónica and Liberty Global will provide the joint venture with a set of Information Technology (IT) and technology services, purchases, brand management and other support services, mainly.