An O2 and Virgin Media merger is confirmed to be on the cards

Virgin Media and O2 are set to attempt to merge after admitting they are in talks to create a joint venture between the two companies that would provide, mobile, fixed and cable telephone and TV services.

Telefonica has sounded a note of caution about the latest deal, saying: "The process started between both parties is in the negotiation phase, with no guarantee, at this point, precise terms or its probability of success."

O2 is the UK's largest mobile network, with around 34 million customers. Virgin Media has over 5 million customers using its services. 

However, it would be surprising if the effort made it past regulators - O2 was the target of a £10bn takeover in 2015 by Hutchison-owned Three. That move was blocked on the grounds of being anti-competitive. 

There is a difference this time around though - Telefonica-owned O2 could argue that Virgin's cable TV and phone business is complimentary to O2's offering where it couldn't do that with Three, bein a direct rival in the mobile space.

Spanish giant Telefonica has been keen to pass O2 on for a while; after the failed Three deal it even thought about spinning O2 off as a public company in 2016, with Brexit seemingly the key concern.

Virgin Media doesn't own any of its own mobile phone spectrum; instead it uses Vodafone's network to deliver mobile services at present. That would, of course, change if it teamed up with O2. 

One interesting angle is around the including of ITV in a potential deal. ITV is struggling - because of the fall in advertising revenue due to the current global situation. Liberty Global is the largest shareholder in ITV (with just short of a 10 percent stake) and also owns Virgin Media. 

Liberty Global had also spoken to Vodafone in the past about a tie-up, but talks didn't progress. 

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