VMO2 - comment

Liberty Global and Telefónica are lobbying the CMA to revisit its provisional objections to Nexfibre’s £2bn acquisition of Netomnia, arguing that BT’s acquisition of TalkTalk has materially changed the competitive landscape.

The CMA’s interim report of 2 October acknowledges the potential benefits of greater scale and investment, but concludes these are insufficient to offset the loss of wholesale competition. While fewer competitors will naturally reduce competition, that should not be the only consideration: the ability to build a financially sustainable challenger to Openreach and deliver incremental investment also matters. The challenge is whether VMO2’s shareholders can demonstrate that these benefits are both material and deal-specific. BT’s TalkTalk deal adds pressure to the debate, but does not guarantee a change in the CMA’s position.