Virgin Media O2's Spanish co-owner explores full takeover
Telefonica, which holds a 50pc stake in VMO2, is exploring plans for a deal that would allow it to buy out its US joint venture partner Liberty Global.
Marc Murtra, the Telefonica chairman, has held discussions with advisers though no formal proposals have yet been drawn up, Bloomberg reported. Telefonica could look to take full control of VMO2 as part of a broader effort to build scale across Europe.
Discussions over the future of the joint venture come at a critical juncture for the UK's telecoms market.
Vodafone and Three are finalising a £15bn merger that will create Britain's largest mobile network operator – with around 27m customers.
Meanwhile, the broadband industry is bracing for a wave of consolidation as a slew of challenger providers, known as 'alt nets', struggle to dent BT's dominance in the full-fibre rollout.
VMO2, which has more than 45m mobile and broadband customers in the UK, was formed through a £31bn mega merger in 2021.
However, Telefonica has since written down its stake and the future of the joint venture has been plunged into uncertainty as the Madrid-based telecoms company carries out a sweeping strategic review.
Mr Murtra initiated the review after he was installed by the Spanish government, which holds a 10pc stake in Telefonica, following the shock ousting of long-serving boss José María Álvarez-Pallete earlier this year.
The upheaval has already led to Liberty Global halting the search for external funding for VMO2's new wholesale division, which was supposed to launch in the first half of the year but has now been delayed.
A lock-up period stipulated under the terms of VMO2's 2021 merger has now expired, meaning either company can initiate a stock market float.
Emilio Gayo, Telefonica's chief operating officer, said: 'We're very happy with the current situation. The joint venture is working very well, we don't have any proposals on the table to change that situation at the moment.
'Both companies, Liberty and Telefonica, are trying to find the best ways to develop the business.'
It is unclear how any deal initiated by Telefonica would handle VMO2's debt pile of close to £22bn. Telefonica itself had net debt of €27bn (£22.7bn) at the end of the first quarter.
Liberty Global is also thought to have considered spinning off VMO2, similar to its recent listing of Swiss telecoms operator Sunrise.
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