Sky’s concerns about O2-Virgin Media merger in UK addressed, says O2 CEO

By Paul Sandle

LONDON (Reuters) – Sky’s concerns about a planned merger between British mobile operator O2 and Virgin Media have been addressed, the chief executive of Telefonica UK’s O2 unit said, clearing one objection to the $38 billion deal expected to close mid-year.

Sky said in a submission to the Competition and Markets Authority (CMA) made in February it was concerned the merger could have a significant adverse impact on competition by harming Sky Mobile. The submission was published on Wednesday.

“Since that time I can confirm that both organisations have reached an agreement which addresses their concerns in full, and the CMA is fully aware of that situation,” O2 CEO Mark Evans said in an interview after Telefonica published full-year results.

Virgin Media is a direct competitor to Sky’s pay-TV and broadband business, while Sky uses O2’s network to provide mobile services to its customers.

O2 expanded its customer base by 4.8% in 2020 to 36.2 million connections and added 80,000 new contract customers in the final quarter, Telefonica’s results showed.

Full-year operating income before depreciation and amortisation (OIBDA) fell 1.1% year on year to 1.834 billion pounds, it said, reflecting the drop in revenue caused by the COVID-19 pandemic.

But cost control and an increase in direct sales helped increase the margin by 1 percentage point to 30.8%, beating analysts’ expectations.

Evans said he was confident the merger would be cleared. “It is a pro-competitive move, that will benefit customers and the UK economy alike,” he said.

Evens said Telefonica and Liberty would wait until the regulatory process had advanced further before announcing details such as the leadership.

Asked if he and finance director Patricia Cobian wanted to lead the new company, he said: “There’s a real appetite to play whatever role we can in forming that organisation and taking it to the next level.”

(Reporting by Paul Sandle; Editing by Estelle Shirbon and Edmund Blair)