Virgin Media O2 and Daisy Group have announced a merger of the two businesses to form a B2B UK communications and IT colossus.
Virgin Media O2 and Daisy Group are joining forces to consolidate their business communications and IT services, establishing a new telecoms giant valued between £2.5 and £3 billion, inclusive of debt. Under the terms of the agreement, Virgin Media O2 will hold a 70 percent stake in the newly formed venture, with Daisy Group retaining the remaining 30 percent. With an estimated customer base of around 700,000, the merged entity will significantly expand its footprint in the SME sector, in particular.
The new venture will be led by key figures from both parent companies: Daisy Group founder Matthew Riley is set to serve as Chairman, while Jo Bertram, Managing Director of Virgin Media O2 Business, will take on the role of CEO.
“This is a significant milestone in Daisy’s 24-year history,” added Riley. “This transformational transaction will revolutionise the telecommunications and IT landscape and create the most comprehensive offering for businesses of all sizes across the UK. 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.”
The merger brings together two major players in the UK market, resulting in a combined entity generating approximately £1.4 billion in annual revenue. The combined business is positioned to become a formidable competitor to BT Group, the UK’s dominant provider of IT and telecoms services for SMEs.
A source cited by Sky News indicated that the UK’s Competition and Markets Authority (CMA) will likely closely examine the merger. However, the deal is not anticipated to face significant regulatory hurdles or delays in gaining approval.
“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,” said Lutz Schüler, CEO of Virgin Media O2.
“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.”
At the outset, both companies will operate under their separate brands from their current office bases.
What Does This Mean for the UK’s Communications and IT Landscape?
The merger between Virgin Media O2 and Daisy Group illustrates an earth-shattering shift in the UK’s telecoms and unified communications (UC) space.
By combining their business-focused operations, the two firms are cultivating a £3 billion behemoth with a strong focus on serving SMEs, a segment traditionally dominated by BT Group, as well as large enterprises, public sector bodies, and channel partners. Backed by Virgin Media O2’s next-gen fibre and mobile infrastructure and Daisy’s IT platforms and customer support, the company aspires to offer a holistic, digital-first portfolio spanning cloud comms, 5G private networks, IoT, cybersecurity, and AI-driven services like O2 Motion.
With a projected customer base of 700,000 and joint annual revenues of £1.4 billion, the new company will likely be well-positioned to bundle services and invest in emerging tech, including AI-powered communication platforms and sophisticated network services.
The merger also embodies a broader industry shift of the convergence between telecoms and IT services to address the growing demand for integrated solutions. As the likes of hybrid work, cybersecurity concerns, and digital transformation continue to inform organisational priorities, the demand for providers delivering seamless, end-to-end infrastructure is ever-growing.
Moreover, market differentiators like cost synergies and scalability could hand the VMO2-Daisy business the leverage to offer more competitive pricing and faster innovation cycles.
Meanwhile, the leadership pairing of Daisy’s Matthew Riley and VMO2 Business’s Jo Bertram underscores a focused strategic direction to take advantage of SME market momentum. It is another major win for Riley, who has overseen several prominent mergers and acquisitions as head of Daisy Group. One of its business arms, Daisy Corporate Services, merged with Wavenet only last May to become the UK’s largest independent IT managed services provider (MSP).
More Specifics on the Merger’s Financials
The deal will be funded through a £425 million secured loan from Virgin Media O2 and £835 million in debt from Daisy Group. Virgin Media O2 will raise additional financing at its current borrowing rate to help refinance Daisy’s existing debt via a second loan.
The combined business will be fully absorbed into Virgin Media O2’s financials, with minimal short-term impact on its leverage. The company’s target leverage range of 4x to 5x remains unchanged. Cash flow distribution will align with Virgin Media O2’s policy, starting with a focus on reducing debt. Standard exit terms have also been agreed to allow flexibility down the line.
