VIRGIN MEDIA, Britain’s second-biggest broadband provider, will announce its sale to US tycoon John Malone’s Liberty Global as early as today, after a deal worth around $20bn (£12.8bn) was signed late last night in New York.
The telecoms group, which offers pay-TV, broadband, landline and mobile services, announced talks yesterday morning, pointing to “a possible transaction”, although it did not elaborate.
News of the talks sent shares up 18 per cent yesterday, giving Virgin Media a market valuation of £7.8bn. The deal will also include the company’s £5.7bn of debt.
Liberty Global, though based in New York, owns telecoms companies in 11 European countries, and is understood to see huge potential in the UK, where the pay-TV market is far less saturated than in the US.
Between them, BSkyB and Virgin Media have 14.1m pay-TV customers, over 95 per cent of the market but still only around half of the households in the UK.
Virgin Media’s expertise in signing customers onto triple-play (landline, broadband and pay-TV) or even quadruple-play (including mobile phone packages) could also reap rewards for Malone’s operations in the US, where firms are trying to put more customers onto these packages.
A deal would hand Richard Branson, who was instrumental in Virgin Media’s founding in 2007, a $600m windfall. His Virgin Group owns three per cent of Virgin Media, although this is down from 10 per cent a few years ago.