Watching out for members as O2/ Virgin Media merger talks are revealed
Telecoms & Financial Services, Telefonica UK, Virgin Media May 6 2020
Close tabs are being kept on reports of a possible tie-up between O2 and Virgin Media – with the CWU intent on ensuring that members in both companies are kept fully informed of developments that could affect their futures.
Following media speculation over the weekend that a mega-merger creating one of the UK’s largest entertainment and telecoms firms could be in the offing, the union has already sought clarification from Telefonica UK over the company’s intentions.
Similar opportunities for dialogue don’t exist at Virgin Media – following the company’s to unilaterally and unprovoked decision to derecognised the CWU in November 2012 – but the union is equally determined to provide as much clarity as possible for members across the VM as soon as possible.
To date all that is known for certain is that on Monday Spanish-owned Telefonica confirmed that it is in talks with VM’s private equity owner – Liberty Global.
Telefonica stressed that the negotiations were ongoing and there was no guarantee they would reach a deal.
A statement issued by the company read: “The process initiated by both parties is in a negotiation phase, not being able to guarantee, to this date, neither the precise terms nor the probability of its success.”
VM, by contrast, declined to issue any media comment.
O2, which provides the network for Tesco Mobile, Giffgaff and Sky Mobile, is the UK’s largest mobile phone operator with around 34 million users.
Virgin has about six million broadband and cable TV customers and another three million mobile users.
Commentators have observed that a tie-up between the two would increase pressure on BT, which owns the UK’s second-largest mobile network EE. BT has around 28 million mobile, TV and broadband customers across the country.
Speculation about O2’s future as a stand-alone network is not new. In 2015 Telefonica tried to sell its UK mobile business to the owner of Three, CK Hutchison, for £10.3bn – but the deal was ultimately blocked by the European Commission over concerns that it would have left just three major mobile phone operators in the UK.
However, some believe a tie-up between O2 and VM would be less likely to run into similar regulatory hurdles, because VM mainly provides services through cable, such as broadband and TV, whereas O2 focuses on mobile.
Monday’s Financial Times quoted Deutsche Bank estimates valuing VM at £15.5bn and O2 at £11bn, along with predictions that a merger “could create £6bn of synergies and cost savings based on reduced operating expenditure and cutting the £200m that Virgin Media spends leasing capacity on mobile phone networks to offer its own wireless service.”
CWU assistant secretary Sally Bridge, who is the union’s lead negotiator on matters concerning members in Telefonica, said: “Merger possibilities always creates a tangible degree of anxiety for workers in those organisations that are in the frame because they know precisely what terms like ‘synergies’ and ‘efficiencies’ can mean for employees down the line.
“That’s why the CWU is keeping close tabs on developments, with a view to raising staff concerns and seeking reassurances and above all clarity throughout a process that can be deeply unnerving for many members.
“It’s too early to tell yet where all this is going to lead, but CWU members can rest assured that the union will be watching out for their interests every inch of the way.”