Partnership Talks Between Sky and Virgin Media O2 Have Sent BT Shares Plummeting

Back in June, O2 (owned by Telefonica) and Virgin Media (owned by Liberty Global) merged forces in a 50/50 partnership. The merger was permitted to go ahead by the UK Competition and Markets Authority (CMA) in May after careful deliberation. 

There were several UK telecoms companies that objected to the merger. Many said that the move was anti-competitive, given the collective size of the new giant. One that was fairly forthright with their objections at the time was Sky. However, it seems now that the deal has gone ahead, Sky is looking to take advantage of the new partnership.

Several outlets are reporting that Sky is in talks to partner with Virgin Media O2 on their recently announced infrastructure project to extend full fiber broadband to a further 7 million homes across the UK.

Discussions are in the early phases. However, there are reports that Sky will invest in the project, or may even spin out Virgin Media O2’s network as a joint venture. Virgin Media O2 are also reportedly in talks to offer wholesale access to its network to Sky, Vodafone and TalkTalk, who are all currently using BT’s network. 

Needless to say, the recent news has come as a major blow to BT and their stock price has taken a major hit, dropping by 8%. These latest moves by Virgin Media O2 have cemented them as a serious challenger to BT’s network dominance. 

Perhaps this was at the core of the CMA’s decision to allow the merger in the first place. We already have an existing monolith network provider in BT and this merger, far from being anti-competitive, was exactly what we needed to offer some serious competition to BT. 

How the landscape will shift from here isn’t entirely known. We know BT has fairly expansive plans of their own. But as we always say, competition in the telecoms space is always a good thing. Virgin Media O2 will no doubt apply pressure to BT, causing them to increase their network coverage and speeds. Virgin Media O2 will have to do the same in order not to fall behind. Ultimately, we the customers will benefit from this competition. 

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