James Fontanella-Khan

Liberty Global and Telefónica have struck a landmark deal to combine their British operations O2 and Virgin Media in a £31.4bn agreement that will reshape the UK’s telecoms market. Under the terms of the agreement, the companies will have equal ownership of O2 and Virgin Media and have built-in mechanisms for a potential float of the combined business in three years.

Donald Trump’s transition team has reassured AT&T that its acquisition of Time Warner will be scrutinised without prejudice despite the President-elect vowing to block the deal because it concentrated too much “power in the hands of too few.”

America’s largest telecommunications group by market value has been encouraged by Trump’s appointments to his transition team of two former competition officials with a hands-off record on antitrust enforcement, people close to the company said. President-elect Trump picked as his antitrust advisers Joshua Wright, a former federal trade commissioner with traditional Republican views on competition policy, and David Higbee, who worked in the business-friendly administration of George W Bush. After talking with the president-elect’s team, AT&T executives are confident that their deal has a good chance of passing regulatory scrutiny.

AT&T has promised to use its proposed $85.4 billion purchase of Time Warner to revolutionise mobile entertainment as it unveiled a deal that will unite companies instrumental in the creation of the communications industry, provided it is approved by regulators. The cash and stock deal, worth $107.50 a share, brings together the telephony pioneer started by Alexander Graham Bell with an entertainment group that has its roots in the early days of Hollywood. The acquisition faces at least a year of scrutiny from US competition regulators and possible objections from rival content groups fearful of the combined entity’s market power.

Randall Stephenson, AT&T’s chief executive expressed confidence that regulators would approve the acquisition, saying there was no overlap between the two businesses. “This is not a horizontal deal. This is vertical merger. You would be hardpressed to find examples where vertical mergers have been blocked.” Time Warner has agreed to pay a $1.7 billion break-fee to AT&T if it opts to sell to another buyer while AT&T will pay Time Warner $500 million if regulators block the deal, apparently.