Telefonica and Liberty Global announced the aim to offer 5G services in 100 towns and cities across the U.K. by the end of 2021, following the proposed merger of Telefonica’s O2 and Virgin Media, U.K. newspaper The Times reported.
According to the report, Telefonica’s CEO Jose Maria Alvarez-Pallete and Liberty Global’s CEO Mike Fries said that the combination of gigabit broadband speeds and 5G will have a positive impact in sectors including manufacturing, healthcare and transport.
The two executives also noted the country was falling behind in terms of connectivity, ranking at the bottom of the Group of Seven (G7) economies for average broadband speed, which they said “should be unacceptable to everyone.”
In an effort to change this scenario, the two operators unveiled plans to bring gigabit speeds to 16 million homes across the U.K. in the first year following the merger, according to the report.
The merger is under an initial review by the European Commission.
In May, Liberty Global and Telefonica reached an agreement to merge their U.K. operations in a 50-50 joint venture.
This move brings together the country’s largest mobile operator, O2, with cable operator Virgin Media and its MVNO Virgin Mobile.
The combined subscriber base of the two companies, as of the end of 2019, was 46 million, and they would have combined annual revenue of £11 billion (currently $14.27 billion).
Liberty Global and Telefonica previously said that the transaction is expected to close by mid-2021 and is subject to regulatory approvals.
Telefonica and Liberty Global said they will ensure that the JV will benefit from the scale and “complementary expertise” of each partner. To accomplish that objective, the parties have agreed to provide a suite of services to the JV after closing, primarily consisting of IT and technology-related services, procurement, brand management and other support services.
The two firms also said that the JV is expected to generate significant operating benefits, with estimated run-rate cost, capex and revenue synergies of £540 million on an annual basis by the fifth full year post closing. The key expected sources of cost and capex synergies include the use of existing infrastructure to provide services for each entity’s customers at lower cost compared to standalone capabilities and the migration of Virgin Media mobile traffic to Telefonica UK’s network, among others.
O2 launched its 5G network in the U.K. in October 2019. O2’s 5G network was initially available in certain areas of Belfast, Cardiff, Edinburgh, London, Slough and Leeds. The carrier said that the initial focus for its 5G network is on highly populated areas including railway stations, shopping centers and sports stadiums.
The telco said that its 5G network will be live in a total of 50 cities across the U.K. by summer 2020.
O2’s 5G network infrastructure is being rolled out in partnership with Ericsson and Nokia.
