Eurobites: Virgin Media Blesses 3/O2 Deal

News Analysis Paul Rainford, Assistant Editor, Europe 2/5/2016

Also in today's EMEA regional roundup: Deutsche Telekom declared Europe's top telecom brand; new CEO at Telenor Serbia; latest on Google's UK tax sop.

UK cable operator Virgin Media Inc. (Nasdaq: VMED) -- now owned by Liberty Global Inc. (Nasdaq: LBTY) -- has given its backing to the proposed merger between Three UK and Telefónica UK Ltd. (O2), on the understanding that it will be able to bolster its own mobile offer as network capacity is freed up by the merging operators as a condition of the deal. In a statement, Virgin CEO Tom Mockridge said: "A combined O2-Three could have more to offer consumers and, crucially, more capacity for other providers who want to drive competition in their own right. With the right remedies, this deal could stimulate not curb competition." Canning Fok, the chairman of 3, has already used an open letter to promise that his company will offer improved wholesale deals to MVNOs if it is given the go-ahead to acquire O2. Vodafone Group plc (NYSE: VOD) boss Vittorio Colao, meanwhile, has expressed his concerns about the 3/O2 merger -- in particular how it could make the newly minted BT Group plc (NYSE: BT; London: BTA)/EE combination even more powerful in the UK market. (See Hutchison Offers Major Concessions to Seal 3/O2 Deal and Vodafone CEO: I Want a Piece of Openreach.)

Deutsche Telekom AG (NYSE: DT) has been declared the most valuable telecom brand in Europe by Brand Finance Global, which modestly describes itself as the world's leading independent brand valuation and strategy consultancy. The brand values are calculated on the basis of what license fees a company would have to pay if it did not own the brand. Vodafone took second place, with Orange (NYSE: FTE) limping in third. However, DT still isn't the most valuable German brand -- BMW bagged that accolade.

Ingeborg Øfsthus has been appointed CEO of Telenor Serbia and EVP of Telenor Group, effective March 1. She replaces Ove Fredheim, who is moving to a new role within Telenor. Øfsthus is currently Telenor Serbia's CTO.

The European Telecommunications Network Operators' Association (ETNO) has published a report, Fostering investment and competition in the broadband access markets of Europe, which claims to pinpoint a gap in investment in high-speed broadband infrastructure and puts forward a set of "key principles" to stimulate greater investment and greater competition in the fixed broadband sector. The report was compiled by research consultancy Plum.

The UK government's controversial tax deal with Google (Nasdaq: GOOG) just got more controversial. According to Bloomberg, around a quarter of the tax authorities' £130 million ($185.5 million) settlement with the search giant was related to a six-year-old audit of how Google accounted for stock-based compensation it gives UK employees, rather than just being about profits diverted to tax havens. John McDonnell, the finance spokesman for the UK's opposition Labour Party, said that, if true, this was "truly shameful behavior by the Chancellor," who originally sought to take the credit for the Google deal.

— Paul Rainford, Assistant Editor, Europe, Light Reading