Telecoms giant BT Group PLC (LON:BT.A) is facing the prospect of stiffer competition after UK regulators gave the green light to a merger between broadband and TV provider Virgin Media and major mobile network O2.
On Thursday, the Competition and Markets Authority (CMA) said while it was initially concerned the merger could raise prices and reduce the quality of wholesale services, its review had concluded that the deal is “unlikely to lead to any substantial lessening of competition”.
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“O2 and Virgin are important suppliers of services to other companies who serve millions of consumers. It was important to make sure that this merger would not leave these people worse off. That’s why we conducted an in-depth investigation. After looking closely at the deal, we are reassured that competition amongst mobile communications providers will remain strong and it is therefore unlikely that the merger would lead to higher prices or lower quality services”, CMA panel inquiry chair Martin Coleman said in a statement.
The £31.4bn combination of Virgin Media, which is owned by telecoms giant Liberty Global PLC (NASDAQ:LBTYA), and O2, owned by Spanish group Telefonica, is now expected to complete on June 1 and will create a powerhouse in the mobile and broadband sectors
The merger was initially agreed in 2020, however, the process was held up by the CMA’s months-long review.
Shares in BT dropped 1.7% to 169.1p in early trading.