Pop quiz: What do you get when you merge one major connectivity and communications business's next-gen fibre and mobile infrastructure with another IT service business's suite of platforms and leading customer service? A meteoric game-changer in the UK's telecoms, communications and IT space.
That's just what happened this week, with Daisy Group merging with Virgin Media O2 Business (VMO2) to form a £3 billion behemoth. It's a seismic event in the UK B2B tech world. But how exactly did this happen? What attracted these two already-major players to one another to form one complementary titan?
"Why was I attracted? I was attracted to it because they've got over 500,000 customers," a visibly (and understandably) delighted Matthew Riley, Daisy Group CEO (and now combined business Chairman), told UC Today. "That's a really, really big customer base that's predominantly been mobile and connectivity."
What we bring with Daisy is a lot more cloud-based technology that we can sell to those customers, as customers want to digitalise. We see it as a great opportunity to help customers on that digital journey."
"Basically, VM02, the business element of it, sat underneath the huge consumer brand that is Virgin Media 02, and it got lost in the numbers a little bit, I think it'd be fair to say, without being too disparaging," Riley continued. "I think it was less than 10 percent of the revenue, less than five percent of the profit."
"So it didn't get the attention it'll get from us, because all we do is B2B. We serve business customers up and down the country. That's all we've done for 24 years. That's what we do day in and day out. We don't have a consumer business to worry about or even think about. So I think, first of all, it'll give it, hopefully, some entrepreneurial flair, and a little bit of a different view on things.
Virgin Media O2 will hold a 70 percent stake in the newly formed venture, with Daisy Group retaining the remaining 30 percent. After onboarding the 500,000 VMO2 customers that Riley outlined, the merged entity will count an estimated customer base of around 700,000, illustrating a significant expansion of its footprint in the SME sector.
For Riley, the synergies between the two companies couldn't be more perfect. These were two companies that promised a marriage made in product heaven.
"Virgin Media O2 has two amazing assets," Rile elaborated. "One is the fibre network, which is second only to BT, and the other is their mobile network, which is 5G-ready and again only really rivalled by Vodafone and EE. So, it's a massive opportunity from a product perspective."
"We spend a lot of time speaking to business customers, and one of the things they say to us is, 'We live in a more complex world than we did before COVID.' But since COVID, people have been doing things like Teams calls every day. They're also managing payments digitally. They have to have online purchasing, procurement, etc., so the UK B2B market is starting to digitalise."
It's trying to find someone you trust to help you on that path. I think that's where we become that trusted advisor, really. We can take people from just having a plain old connectivity product right through the cloud, antivirus, spam, cloud hosting, etc."
As Riley alluded, another key benefit from the merger from Daisy Group's perspective is the enhanced product portfolios they can now offer customers, from AI-powered cloud communications and 5G private networks to sophisticated cloud storage solutions and advanced cybersecurity systems. That array of cutting-edge services is a significant market differentiator, with Riley keen to highlight the transformative potential of cybersecurity services, especially for SMEs.
"Every time you pick up the paper every week, there's another huge cyber attack," Riley said. "If you're a small business, it's really worrying because you don't really know what to do. Most people aren't that IT savvy, so they need some help.
"I'm an entrepreneur, I've built many different businesses over the years, and one of the things I've found quite difficult is managing my IT infrastructure. One of my first employees is still with us today. He used to laugh, saying, 'I'm in control of anything with the plug on it,' because I used to go to him and say, 'You understand this stuff.'"
"But it's really hard if you're a small business, right? You can't afford an IT director and things like that, so you've got to go somewhere where they're trusted, they've got a broad range of skills, and a broad range of products, and that's what we offer at Daisy."
