Virgin Media O2 (VMO2) says it will create a wholesale challenger on the UK fibre market as it looks to complete its upgrade of 16 million homes to full fibre.
VMO2, and shareholders Liberty Global and Telefónica, have “initiated plans” to create a distinct national fixed network company (NetCo) that will underpin full fibre take up and roll out; provide new financing optionality and a platform for potential altnet consolidation opportunities.
The network will bundle the operator’s cable and fibre network assets covering 16.2 million premises into a single network.
Lutz Schüler, CEO of Virgin Media O2, said: “This is a logical evolution of our fibre strategy that creates a clear, focused and scaled network entity within the Virgin Media O2 family which underpins our shift to a fully fibre network and reinforces our position as the leading challenger to Openreach in the market.
“Working closely with our shareholders, this network business will provide a platform for potential altnet consolidation and wholesale opportunities in future, offering widescale network choice for other providers, as well as giving financing optionality. While nothing changes today work is well underway and you’ll hear more from us later in the year.”
The move provides a potential catalyst for consolidation similar to that seen in the 1980s and 1990s when smaller cable operators merged into what is now VMO2. At the same time, creating opposition of size to Openreach, BT’s infrastructure unit that maintains the telephone cables, ducts, cabinets and exchanges in the UK.
Through a wholesale agreement, NetCo will connect Virgin Media O2’s entire fixed customer base. VMO2’s mobile assets will not form part of the NetCo, and nexfibre, the independent fibre joint venture between Liberty Global, Telefónica and Infravia, will continue to operate separately focusing on fibre network expansion into greenfield areas.
Once all planned fibre build is completed, the separate NetCo and nexfibre networks will reach a combined total of up to 23 million homes, reaching around 75% of the country.
Between them, Virgin Media O2 and nexfibre have a full fibre footprint of more than 4 million premises today.
