O2 and Virgin Media will merge into a single British communications giant capable of offering converged services combining fixed and mobile connectivity. As rumored earlier this week, parent companies Telefónica and Liberty Global agreed to combine O4's 5G and 2G infrastructure with Virgin Media's high-speed cable network in a joint venture of more than € 31 billion. O2 currently has 34.5 million users on its network, a figure that includes mobile virtual network operators (MVNOs) such as Tesco Mobile, while Virgin Media has more than 5 million subscribers. The combined customer base immediately propels the merged entity into the field of Europe's largest telecommunications companies. The potential for convergent services is significant, as Telefónica and Liberty Global promise to invest € 10 billion over the next five years, while consolidation will also save € 6.2 billion. It is unclear whether the combined entity will use one or both brands, but it will be in a better position to compete with BT, which has prioritized convergence in recent years with the acquisition of EE and investments in 5G and fiber infrastructure. Although Virgin Media has a mobile virtual network operator (MVNO), it has never had a mobile network. Similarly, O2 does not have a fixed network. Convergence will enable the development of new services for consumers and businesses that will take advantage of various communication technologies. "We are creating a strong competitor with significant scale and financial strength to invest in the UK's digital infrastructure and provide millions of consumers, businesses and public sectors with more choice and value," he said. Jose Maria Alvarez-Pallete, CEO of Telefónica. "This is a proud and exciting time for our organizations as we create a leading provider of integrated communications in the UK." "With Virgin Media and O2 together, the future of convergence is here today," added Mike Fries, CEO of Liberty Global. "We saw the benefit of first hand in Belgium and the Netherlands. When the power of 5G reaches 1 gig broadband, consumers and businesses in the UK will never look back. We are entering this market and we are just behind the digital and connectivity objectives of the government. "Telefónica almost sold O2 to Three's parent company, CK Hutchison, in 2015. A €10.25 billion deal has been reached to merge the two operators, but the decision has been blocked by the European Commission due to competition concerns The combination of O2 and Three would have created the UK's largest mobile operator and reduced the number of players from four to three. It was unpleasant for the EC who feared that innovation would decrease and prices would increase. O2 performed well for Telefónica in the years that followed, and Telefónica considered an IPO before completing the merger proposal. Virgin Media was first linked to an O2 takeover immediately after the merger attempt collapsed. The deal is expected to close next year, subject to regulatory approval from competition authorities.