The owners of Virgin Media O2 are considering additional UK fibre acquisitions and wholesale partnerships as they seek to strengthen their position against BT’s Openreach network.
According to reports in the Financial Times and The Times, Spain’s Telefónica – which jointly owns Virgin Media O2 with Liberty Global – is examining potential deals with alternative network providers as consolidation accelerates in the UK broadband market.
The move follows the recently announced £2 billion (€2.3 billion) agreement by Virgin Media O2’s fibre joint venture Nexfibre to acquire altnet operator Netomnia. The transaction would significantly expand Nexfibre’s footprint and increase the number of premises available to Virgin Media O2.
With the Netomnia acquisition, Nexfibre’s network is expected to reach around 8 million UK homes. Combined with Virgin Media O2’s existing cable footprint, the operator could ultimately serve around 20 million premises.
However, this still trails BT’s Openreach, which has already extended its full-fibre network to more than 20 million premises and aims to reach 30 million by the end of the decade.
Telefónica chairman Marc Murtra told the Financial Times that acquisitions could represent the most effective way of expanding fibre coverage in the UK as the company focuses on its core markets of Spain, Germany, Brazil and the UK.
Industry observers say the strategy reflects increasing financial pressure on smaller UK fibre operators, many of which expanded rapidly during the past decade but are now facing higher borrowing costs and slower subscriber growth.
As a result, consolidation across the so-called “altnet” sector is widely expected, with larger infrastructure players and established operators such as Virgin Media O2 emerging as potential buyers.
Alongside acquisitions, Virgin Media O2 is also exploring wholesale agreements that would allow other providers to access its broadband infrastructure.
Discussions have taken place with VodafoneThree over the potential use of the Virgin Media O2 and Nexfibre networks to support the mobile operator’s fixed broadband ambitions.
Virgin Media O2 and Nexfibre are positioning themselves as a major alternative to Openreach as the UK moves towards nationwide full-fibre connectivity, with further network partnerships and acquisitions likely as the market consolidates.
