There’s less to this O2-Virgin Media mobile merger than meets the eye

No industry is untouched by the pandemic, but few are more shielded from its direct impact than telecoms operators.

Their services are in high demand as millions work from home and their finances are underpinned by steady monthly subscription income.

Of course, the industry will suffer as its customers face financial distress in the coming months, and their share prices have tumbled to reflect that. Some operators have too much debt, too. But, as other parts of the consumer economy fight for life, the utility-like characteristics of telecoms have provided partial immunity from the carnage.

This relative stability has, no doubt, played a role in the decision by Liberty Global, which owns the cable operator Virgin Media, and Telefonica, which owns the mobile network O2, to press ahead with a multibillion-pound merger of their UK businesses.

Confidence in the deal, which is scheduled to be unveiled on Wednesday alongside Liberty’s first quarter results, will be bolstered by the fact it is in many ways a re-run of BT’s £12.5 bn takeover of EE, in 2015. It also combined a fixed line broadband business with a mobile network, with little overlap between the two, betting on a 5G future in which the line between wired and wireless connectivity is increasingly blurred.

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