Telefónica and Liberty confirm merger deal for O2 and Virgin Media
Last month, the potential agreement between the two companies was announced, but the merger has now finally been confirmed in today's session after said agreement was approved by the British authorities. Consequently, it has given birth to a joint venture called VMED O2 UK, which aims to challenge the leadership of British Telecom (BT) in the United Kingdom, with the new company targeting a potential reach of 47 million users.
This joint venture will be 50% owned by Telefónica and Liberty, with the Spanish company set to receive €6.4 billion as part of the deal, €3.14 billion of which corresponds to the cash payment made by Liberty Global as compensation for its participation in the merger. Further to this, it is expected that with this transaction, Telefónica's net debt will be reduced by some €5 billion.
On May 12, Telefónica presented its quarterly results where we could observe that both earnings per share and income exceeded market expectations, reaching €0.15 per share and €10.34 million in income. Such figures signify the importance of the agreement, as it offers a solid platform on which the companies can continue strengthening in the financial markets going forwards.
In recent years, Telefónica has been one of the main players in the Spanish stock market. However, it has experienced problems in terms of a dragging in its price, caused in large part by attacks by bears, with a strong downtrend being aggravated by the problems generated at the start of the pandemic. This led to the company’s value marking minimums not seen since 1996 at €2.70 per share, despite the different measures that were taken in 2019 in relation to the restructuring of the group creating Telefónica Hispam, Telefónica Tech and Telefónica Infra.
Technically speaking, after setting lows on October 29 at €2.702 per share, Telefónica began a trend in the form of an upward wedge that has led it to fight again for €4.00 per share, causing a triple crossing of bullish moving averages that could strengthen this trend.
Currently, the price is at its important support level in its average of 200 sessions and the uptrend line of said wedge, so it is key that we observe the evolution and see if it is able to maintain these levels to form a new bullish momentum that leads you to test your current resistance levels. The break of its current support levels could jeopardise this bullish structure by opening the doors for a possible correction. On the contrary, the overcoming of its resistance could provoke a new upward momentum in search of €5.00 per share.
Evolution in the last 5 years:
- 2020: -46.52%
- 2019: -15.15%
- 2018: -9.67%
- 2017: -7.88%
- 2016: -11.41%
With the Admirals Trade.MT5 account, you can trade Contracts for Differences (CFDs) of Microsoft and more than 3000 stocks! CFDs allow traders to try to profit from the bull and bear markets, as well as the use of leverage. Click on the following banner to open an account today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Roberto Rojas (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
