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Virgin Media, O2 Deal Risk Points to Rivals More Than Regulators

  • Vodafone may not stand by and watch two big rivals merge
  • Telefonica chairman won’t want to see another O2 deal fail
A pedestrian passes a O2 mobile phone store in Berlin.
A pedestrian passes a O2 mobile phone store in Berlin.Photographer: Krisztian Bocsi

The prospect of Britain’s biggest telecommunications deal in five years is threatening Vodafone Group Plc in its backyard, prompting speculation it could counterattack.

A tie-up between Virgin Media and O2, the U.K. broadband and mobile units of Liberty Global Plc and Telefonica SA, could be announced as soon as this week, according to people familiar with the matter. That leaves Vodafone -- viewed previously as a strong alternative partner for Virgin Media -- looking isolated.