Business
Liberty Global and Telefonica to Merge Their U.K. Operations Creating the Leading Fixed-Mobile Provider in the Country
DENVER, Colorado and MADRID, Spain--(BUSINESS WIRE)-- Key Highlights 50-50 joint venture brings together Virgin Media, the U.K.’s fastest broadband network,
About this update from Liberty Global Ltd.
[{"type":"text","content":" DENVER, Colorado and MADRID, Spain--(BUSINESS WIRE)--\nKey Highlights\n\n\n\n50-50 joint venture brings together Virgin Media, the U.K.’s fastest broadband network, and O2, the country’s largest mobile platform\n\n\nCombination creates a stronger fixed and mobile competitor in the U.K. market, supporting the expansion of Virgin Media’s giga-ready network and O2’s 5G mobile deployment for the benefit of consumers, businesses and the public sector\n\n\nFully converged platform will put customers first and have the scale to innovate in the changing digital landscape, investing £10 billion in the U.K. over the next five years\n\n\nJoint venture expected to deliver substantial synergies valued at £6.2 billion on a net present value basis after integration costs, and equivalent to cost, capex and revenue benefits of £540 million1 on an annual basis by the fifth full year post-closing\n\n\nAttractive valuation for both businesses, with O2 valued at £12.7 billion and Virgin Media valued at £18.7 billion, both on a total enterprise value basis. O2 to be transferred into the joint venture on a debt-free basis, while Virgin Media to be contributed with £11.3 billion of net debt and debt-like items2\n\n\nBoth parties expect to receive net cash proceeds at closing following a series of recapitalizations that will generate £5.7 billion in proceeds for Telefonica and £1.4 billion for Liberty Global (after an equalization payment to Telefonica of £2.5 billon3)\n\n\nJoint venture will target ongoing net leverage of 4.0-5.0x, with proceeds from any future free cash flow generation and financing to be distributed equally between Telefonica and Liberty Global\n\n\nThe transaction is expected to close around the middle of 2021 and is subject to regulatory approvals, consummation of the recapitalizations, and other customary closing conditions\n\n\n\nTelefonica Chief Executive Officer, Jose Maria Alvarez-Pallete, said, “Combining O2’s number one mobile business with Virgin Media’s superfast broadband network and entertainment services will be a game-changer in the U.K., at a time when demand for connectivity has never been greater or more critical. We are creating a strong competitor with significant scale and financial strength to invest in UK digital infrastructure and give millions of consumer, business and public sector customers more choice and...