O2 + Virgin Media

Big news for UK… thoughts on share prices? and overall benefits to both companies.

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This is good news for both.
I do not know about Virgin Media, but regarding Telefonica’s stocks:
I personally think that Eurozone stocks will go down again before they go up again, this particularly applies to Telefonica which has not recovered from the Coronavirus impact on its stock price, it was over 6 euros prior to COVID-19 and now it is around 4.30 euros, quite close to its minimum price during this crisis which was around 3.70 euros.

Also, always be careful with Telefonica, since around 2009 it has had a very downwards trend. I think it would be interesting to invest at a price of around 2.5 to 3 euros.

Obviously, this is just my own opinion :slight_smile:.

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Website providing further details is now up.

Are they combining and changing names as well? Or will they just piggy back off of eachother’s products and keep the same name.

It will be a new company, jointly owned by Telefonica and Liberty Global, so highly likely to be a new name or some sort of amalgamation.

Key facts.

Key highlights from the public marketing information:

50-50 joint venture brings together Virgin Media, the U.K.’s fastest broadband network, and
O2, the country’s largest mobile platform

Combination 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

Fully 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

Joint venture expected to deliversubstantial 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

Attractive 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

Both 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)

Joint 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

The 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

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Potentially freezes out Hutchinsons (3) and Vodafone as being the providers without their own main Mobile and Broadband to the home infrastructure. Will be interesting to see how it effects them moving forward. Both BT and Virgin (Merger), now have mobile networks, TV networks, business broadband networks and broadband to the home user networks that they fully own.

Also worth noting Liberty Global and Vodafone did the same joint venture in the Netherlands in 2016, the venture is now turning profitable and there are rumour’s one partner will buy the other out. Obviously no guarantee same will happen here, but it looks to be a repeatable pattern to me.

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