O2 and Virgin Media in talks to merge

Mobile operator O2 may be set to merge with broadband giant Virgin Media to create one of the country’s largest entertainment and telecoms firms.

A tie-up between two major players in Britain’s telecoms and media sector would create a major rival to BT.

Spanish firm Telefonica, which owns O2, confirmed that it was in talks with Virgin-owner Liberty Global.

The company stressed that the negotiations were ongoing and there was no guarantee they would reach a deal.

O2, which provides the network for Tesco Mobile, Giffgaff and Sky Mobile, is the UK’s largest phone company with around 34 million users.

Virgin has about six million broadband and cable TV customers and another three million mobile users.

A tie-up between the two would increase pressure on BT, which owns the UK’s second-largest mobile network EE.

BT has 28 million mobile, TV and broadband customers across the country. It also provides services to a million businesses.

Telefonica tried to sell O2 to the owner of Three, CK Hutchison, for £10.3bn in 2015. But that deal was blocked by the European Commission over concerns that it would have left just three major mobile phone operators in the UK.