O2 and Virgin Media may be combined in a £24 billion deal. The parent companies of the two network operators – Telefonica and Liberty Global – have confirmed they are negotiating a merger.

 O2 has 34.5 million mobile phone customers and Virgin Media has 3.3 million mobile phone customers and 6 million broadband and pay-TV customers.

A merged company would be a major rival to BT. 

However, according to analysts, the motivation is less driven by commercial strategy and more promoted by a simple wish by the parent companies to divest the units. 

Telefonica has debt of $37.7 billion.

For the last seven years, Liberty Global has been paying Sir Richard Branson £10 million a year to use the Virgin name after it bought the company.

The deal is expected to be announced on Thursday.