Virgin and O2 might merge to create a UK telecom giant

It could have a ripple effect elsewhere in the world.

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Two of the bigger telecoms in the UK are reportedly close to uniting. The Guardian sources say the owners of Virgin Media and O2, Liberty Global and Telefonica, are in talks for a UK joint venture that would unite their mobile, internet and TV efforts. The exact motivations for the union wouldn’t be clear, but this would help the two fend off heavyweights BT and Sky.

The companies involved have declined to comment.

A merger could lead to a more consolidated UK telecom space with fewer choices for services, but it could also have ripple effects worldwide. Telefonica has been scaling itself back to focus on four markets — uniting O2 with Virgin could jumpstart that strategy. Liberty Global, meanwhile, could use this to expand its foothold in Europe and bring its set-top platform (Horizon TV) to more people.