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O2 owner confirms talks with Malone’s Liberty Global

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John Malone, CEO of Liberty Global. Photo: Reuters

John Malone, CEO of Liberty Global. Photo: Reuters

John Malone, CEO of Liberty Global. Photo: Reuters

Shares in Spain’s Telefonica rose this morning to post the only strong gains on an otherwise almost entirely red Madrid index, after the company confirmed it was in talks with billionaire John Malone’s Liberty Global over a possible merger of their respective businesses in Britain.

The two have started a negotiation process to merge Telefonica’s British mobile operator O2 and Liberty’s Virgin Media network company, the Spanish company said in a stock market filing.

Mr Malone has strong links to Ireland. He has acquired significant property interests here since the last crash.

The MHL Hotel Collection is a joint venture between Mr Malone, property developer John Lally and businessman Paul Higgins.

It owns 12 high-profile hotel properties in Ireland, including the Powerscourt Hotel in Co Wicklow, and the Intercontinental and Westin hotels in Dublin.

Mr Malone also owns the sprawling Humewood Estate in Co Wicklow and Castlemartin House and Estate in Co Cork. Castlemartin was previously owned by businessman Tony O’Reilly.

Liberty Global bought TV3 here in 2015 from UTV, rebranding its as Virgin Media in 2018.

There is “no guarantee, at this point, of its precise terms or its probability of success,” Telefonica said this morning in relation to its talks with Mr Malone’s Liberty Global.

Two sources familiar with the matter told Reuters on Friday that talks were ongoing.

It would be “potentially positive news for the stock if this is confirmed” Madrid-based broker CM Capital Markets said in a note to clients, adding the integration of mobile-focused O2 with a major fixed broadband provider would be complementary.

Telefonica said it would keep markets informed if a “satisfactory agreement” were reached. The company reports first-quarter results on May 7.

Along with its large European peers, Telefonica has struggled to boost profit growth in the face of fierce competition and reassure investors it can manage a debt pile which stood at €37.74bn at the end of last year.

Shares are down 30pc so far this year, having tracked broadly downwards for the past five years.

Its UK business, which includes O2, generated €7.11bn euros in revenue in 2019, around 14.7pc of the group’s total, and had 34.5 million mobile connections on its network.

Online Editors