He takes the helm at critical moments in the UK broadband and mobile markets
José María Álvarez-Pallete, Chair of Telefónica (pictured), will chair the board of directors of VMO2, replacing Liberty Global’s CEO Mike Fries at a critical moment.
The companies say the move is part of the agreement when the joint venture was formed in June 2021 between cable operator Virgin Media, owned by Liberty Global, and mobile operator O2, owned by Telefónica.
The agreement is that the chair of the board will rotate every two years between the two companies. Mike Fries will remain a member of Virgin Media O2’s board.
Uncertain future?
As well as Virgin Media O2 in the UK, Liberty Global is in a JV with Vodafone in the Netherlands, VodafoneZiggo.
Fries is often asked about plans for the JVs and stated he is open-minded about the future structure of both at a recent earnings call, saying Liberty was “always on the lookout for the most impactful way to create value for shareholders” although obviously any future listing of jointly owned operating companies would need to be agreed by both parties.
The agreement in Telefónica in the UK means that Liberty can dispose of shares in Virgin Media O2 from June 2024.
Equinox 2 casts a shadow
Ofcom’s decision to allow BT Openreach’s lower wholesale pricing, known as Equinox 2, in May was a blow to altnets, of which Virgin Media O2 is by far the biggest. According to ISPreview, Fries told an investor meeting in February that this was a “desperate and premature” move by BT and an “overreaction to the market more broadly.”
There is also uncertainty in the UK market in the apparently never-ending negotiations about a merger between Vodafone and Three UK which began in October 2022. Difficulties include UK authorities’ anxieties about Three having a parent based in Hong Kong, given the suspicion of Chinese techcos being made an instrument of the Chinese state and security risks.
Belgian ambitions?
On the other hand, Liberty Global is known to be interested in acquiring Belgium’s Telenet and delisting it on the grounds, according to Fries, that it would be easier to create value with it as a private company.
Telenet arguably just became an even more attractive target as it won approval from the European Commission to proceed with its joint venture with the Belgian utility company Fluvius. The two are to buid out hybrid wholesale broadband infrastructure. Liberty Global knows a bit about fibre and HFC.