Virgin Media O2 and Daisy Group have announced plans to combine their business-focused operations to form a new powerhouse in the UK’s communications and IT sector. The new entity will merge most of Virgin Media O2’s business with Daisy Group’s B2B arm, creating a company with pro forma revenues of approximately £1.4 billion.
The financial profile of the new company is notable. Based on 2024 full-year figures, the business is projected to deliver approximately £150 million in Adjusted EBITDA and around £100 million in Adjusted EBITDA less Capex. Operational synergies are estimated to have a net present value of £600 million, with the potential for £70 million in pre-tax annual savings by 2030.
The newly established business will be majority-owned by Virgin Media O2, which will hold a 70% stake. Daisy Group will retain a 30% share in the venture. It is expected that the transaction will be completed early in the second half of 2025, pending customary regulatory approvals.
The combined company is designed to meet the needs of a wide variety of UK businesses ranging from small offices and SMEs to large corporations and public sector organisations. Leveraging the infrastructure and expertise of both founding companies, the new business promises to deliver an extensive suite of digital-first connectivity and managed IT services, all under one roof.
Daisy Group founder Matthew Riley will take on the role of Chairman, while Jo Bertram, Managing Director at Virgin Media O2 Business, will serve as Chief Executive Officer. The leadership team will be drawn from both businesses, aiming to blend deep sector knowledge with operational experience. Initially, the two businesses will continue operating under their current brands and from their existing office locations.
Matthew Riley said, “This is a significant milestone in Daisy’s 24-year history. This transformational transaction will revolutionise the telecommunications and IT landscape and create the most comprehensive offering for businesses of all sizes across the UK.” He further added, “Growth is top of the political and business agenda – inextricably linked to this is access to world-class IT and communications infrastructure that is integrated and can scale. Our new entity, which brings together two highly successful companies, will deliver a comprehensive solution for the fast-changing needs of UK organisations supported by specialist teams that have a relentless focus on customer service. It will be driven by the entrepreneurial spirit for which we are known and will catalyse the next phase of our ambitious growth plans.”
Lutz Schüler, CEO of Virgin Media O2, described the deal as a strategic leap forward: “Combining Virgin Media O2 Business with Daisy Group is the perfect pairing and creates a new British business connectivity powerhouse and greater competition in the market. For us, it’s a big step forward in our journey to boost B2B growth and provide UK businesses of all sizes with the best digital and connectivity offerings. Following completion, the new company will have the scale, talent, focus and infrastructure needed to drive digital transformation and provide business customers with an innovative one-stop shop for all their communications and IT needs. We can’t wait to get started on this next chapter in partnership with Daisy.”
The venture will draw on Virgin Media O2’s next-generation fixed and mobile infrastructure as well as Daisy Group’s robust IT systems, digital-first operations, and award-winning customer service. Services offered by the new company will include cloud communications, 5G Private Networks, IoT connectivity, cybersecurity, and AI-enabled solutions like O2 Motion.
Virgin Media O2 will support the venture through wholesale fixed and mobile network agreements. It will also benefit from strategic supplier relationships with Liberty Global and Telefónica, allowing access to a broader suite of innovative services.
More than half of the synergy benefits are expected to be realised within the first three years after completion, driven by network integration, reduction of duplicated overheads, cross-selling opportunities, and streamlined IT operations.
The financial structuring of the transaction involves a secured intercompany loan of around £425 million from Virgin Media O2, with Daisy contributing approximately £835 million in debt. Virgin Media O2 also plans to raise additional funds at closing to refinance existing Daisy debt through a second secured intercompany loan. Despite the scale of the deal, it is not expected to significantly impact Virgin Media O2’s leverage in the short term. The company remains committed to its medium-term leverage target of 4x to 5x and will prioritise deleveraging before any cash flow distributions to shareholders.
As part of the broader agreement, conventional exit mechanisms have been agreed, ensuring flexibility for future strategic developments.
The transaction is set to mark a new era in business communications, with the merged company poised to respond to the evolving digital needs of UK businesses with greater agility, scale, and innovation.
