Virgin Media O2 UK’s Owners Close in on £2bn Broadband Deal for Netomnia
European telecoms giants Telefónica and Liberty Global, the joint owners of Virgin Media and O2 in the UK, have reportedly now joined with private equity firm InfraVia Capital to progress their previously proposed £2bn bid to buy alternative full fibre broadband network Netomnia toward conclusion. The deal is likely to offer the altnet more than rival CityFibre could muster, but competition issues could be raised.
Just to recap. Netomnia (Substantial Group) is one of the UK market’s largest altnets and has deployed their Fibre-to-the-Premises (FTTP) based broadband service to cover 3 million UK premises RFS (inc. 445,000 customers) – available across parts of 98 cities and towns. The group aims to cover 5m UK premises by the end of 2027 (inc. 1m customers by 2028).
By comparison, Virgin Media operates a gigabit-capable fixed line broadband network that covers over 16 million premises (mix of hybrid fibre coax and full fibre connections), although they’re aiming to upgrade all of that to full fibre (FTTP) by 2028.
Advertisement
In addition, Telefónica, Liberty Global and InfraVia Capital also jointly own the semi-separate nexfibre business, which has rolled out an open access (wholesale) full fibre network to 2.5 million premises in areas NOT currently served by Virgin Media’s own network. But at the time of writing, the only two retail ISPs selling services via nexfibre are all part of the same parentage (Virgin Media and giffgaff).
Back in October 2025 reports emerged that VMO2’s parents and CityFibre appeared to be battling over a major network consolidation deal to acquire Netomnia (here). According to today’s FT (paywall) report, VMO2 now appears to be leading with the most attractive offer (CityFibre may be more constrained on this front) and is allegedly close to signing a deal, although none of the parties involved have officially commented on this.
On the surface such a deal would not appear to make much sense, since quite a bit of Netomnia’s fibre has already overbuilt the combined nexfibre and VMO2 footprint. But the move, if confirmed, would also remove a major competitive player in the alternative network space and will, crucially, prevent CityFibre from securing its own merger with the operator and thus growing the scale it needs; this alone could be seen as a win for VMO2, albeit a potentially expensive one.
On the flip side, customers of Netomnia’s network, many of which will have used them to escape from legacy incumbents like Virgin Media and their cycle of inflation busting mid-contract price hikes, will probably be less than pleased about such a transaction and the future impact it may have upon their services.
Advertisement
Indeed, for consumers, a deal between Netomnia and CityFibre is likely to have been much more palatable. This due to the limited level of overbuild and shared position as lower cost broadband disruptors, which makes for a more competitive market. But if CityFibre can’t deliver the most attractive offer, then none of that matters.
The next big question mark remains over how the Competition and Markets Authority (CMA) would view such a deal, since it’s hard to imagine them treating the networks of Virgin Media and nexfibre as being truly separate, due to the shared parentage. The CMA is likely to consider the wider competitive ramifications of such a major operator buying into control of the altnet space like this, and you can bet CityFibre will raise a complaint.
This is all before we even consider the usual complexities and costs for VMO2/nexfibre when it comes to tackling any differences in network infrastructure, retail ISP relationships and technology. All of this could create issues for later network and customer base integration (e.g. what do they do about those areas of network overlap – discard them and migrate customers or discard their own network and migrate the other way).
However, it’s worth remembering that such deals aren’t unexpected in today’s market, particularly with so many altnets being under pressure from competition, rising build costs and high interest rates. Netomnia has been one of the few altnets to continue building through this phase of the market, seemingly with some success, but they’re not immune to the challenges.
Advertisement
As it stands, the FT’s wording appears to suggest that a deal is now all but signed, but nothing’s done until it’s done and that’ll be down to Netomnia’s decision in the next few days or weeks. What they decide may have a noticeable impact upon the wider competitive landscape and force CityFibre to focus on different, and possibly less attractive, consolidation targets; growing the scale they need thus may become harder.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
« The Trouble with Switching from Virgin Media UK to Giffgaff Broadband
Advertisement
Leave a Reply
Privacy Notice: Please note that news comments are anonymous, which means that we do NOT require you to enter any real personal details to post a message and display names can be almost anything you like (provided they do not contain offensive language or impersonate a real person's legal name). By clicking to submit a post you agree to storing your entries for comment content, display name, IP and email in our database, for as long as the post remains live.
Only the submitted name and comment will be displayed in public, while the rest will be kept private (we will never share this outside of ISPreview, regardless of whether the data is real or fake). This comment system uses submitted IP, email and website address data to spot abuse and spammers. All data is transferred via an encrypted (https secure) session.
VM02 + Netomnia = big disaster for consumers.
It should not be allowed by the CMA……. should block it!
On what basis?
@Far2329Light On the basis that it’s bad for competition. Literally the CMA’s job is to ensure good market competition. There’s little about this deal that benefits customers, it barely even benefits VMO2 aside from removing a competitor.
I think it should go ahead, but newVMO2 now has SMP and has to wholesale!
20M property coverage is 80%, no more let off from OFCOM!
@ Kusha:
The main problem wth the UK broadband market is that there are far too many players.
There are so many players in the sector that less than half a dozen – if that – are making a profit with a sustainable business model. That is bad for the development and the stability of the market
That’s annoying, we only just left VM last month to YouFibre.
If netomnia is successfully still growing etc why would they want to sell? A chance for investors to cash in now incase things get worse?
The current climate makes it very hard:
– companies going bankrupt, less confidence in the market
– interest rates going up, money less available
– new round of taxations really hit businesses hard
– again on taxes everyone saw what happened with the theft on energy companies and also some properties, no one wants to be the next “windfall” sector
– violent crimes up so very unsafe for engineers and sales
– car, fuel, parking and fines are also drastically up making the above more expensive
– most expensive electricity in the developed world
– further uncertainty about more taxes makes people leave the country
If again many competitors have thrown the towel, it is not a stretch to say that things have affected Netomnia too. Good on them for not selling for peanuts
Also it does not make sense to downgrade an xgspon customer to VMs old network, it’s obvious they will migrate the other way when available
I keep a backup line with Aquiss Business. Brsk is my current main connection and I am inthe process of being moved over to YF as the first Brsk-YF customer. Lucily they are not extending my contract (even though new customers are now 12 months and I am in month 13 of my 18)
But if this kicks in – forget it. I will stay on FTTP. I dislike Virgin and refuse the be their customer now when they could have cabled this street 15 years ago when it was all put up – instead they left us on ADSL until 2023!
There’s a lot of uncertainty worldwide among the business community largely due to the instability in the United States and the amount of capital that’s being burned on AI.
Investors often have a set period of years in which they’ll invest and look to make a return either through the business itself or an exit.
Add that to the increased risk profile from higher interest rates, global instability, etc, and they may think it makes making some money now rather than holding onto the risk more tempting.
The regulatory environment is a big deal. It seems as though Ofcom are minded to be more liberal with Openreach. If regulation allows they’ll be able to charge less for their own FTTP while charging more for the PIA products others use to access their ducts and poles once they’ve removed copper so a squeeze on both sides.
Lastly there’s also that the altnet bubble, it clearly is one, has lasted for longer than might have been expected leaving prices lower for longer and lowering revenues.
TL;DR relatively little to do with most of the stuff mentioned in the post above, some of which is just plain ridiculous to mention in this context, mostly interest rates and a few big things changing the risk and return profiles.
It’s insanely bizarre blaming the orange man for what happens in an unrelated country in an industry that has nothing to do with it besides selling routers
Worry about your own government destroying entire industries, milking businesses dry and spooking away investments
It’s insanely bizarre getting butthurt over someone making the observation that the largest economy in the world’s trade policy has an impact on the world economy both directly and indirectly given the dollar’s status, and has been erratic recently.
@Gary:
North American investment funds will likely be the largest stakeholders in the AltNet sector.
We at this household escaped virgin media, which we were a customer of for 20 plus years, due to their pricing strategy and their customer service provision, to BRSK, only to be swallowed up by virgin media O2, if this is true, then I’m voting with my feet and moving, but to whom, as there is no open reach fibre here, starlink or 5G are the other other two options.
The other issue is that VM could have an have an expansive underground and an overground network, here, hopefully it’s not wombeling free, unless they plan to underground it all, as why pay openreach for pia usage, where they have own ducts, where there is a significant overbuild.
That being said, Where there is significant overlap between the two providers, the CMA should mandate open network access, and allow third party access.
Same here – on Brsk but not going to stay if this is the case.
I have a Starlink and even their £35 a month 100Mbps plan gives a solid 100 down and about 25 up. Their £55 service is 200/30 and their Max is around 450/50 – of course it all varies but generally it’s good and only going to get better
That’s crazy, I thought VMO2 would never go for it considering the overlap is like 70% or something. It will be interesting to see how CMA and OFCOM react considering they don’t view VMO2 as having a dominant position in the market will they object on the basis of the network overlap. It definitely doesn’t seem like a positive for the consumer as it removes in my opinion well built and managed alternative network. I see no mention of Youfibre, not surprising which means that would proceed as an independent ISP.
VMO2 is not involved in the transaction.
If Virgin Media really does buy out Netomnia, I would simply be forced into sticking with Openreach-based ISP’s, as I don’r want to go anywhere near Virgin Media owned assets. Only way I would is if Netomnia is kept as an independent company but as a parent to VM, but I doubt thats going to happen.
There goes all innovation in the ISP market then. Netomnia was the only major ISP offering actual full XGS-PON Speeds outside of B4RN.
I been waiting more than 4 years Youfibre, and when I can see light at the end of tunnel…
They finally connected wires in pole and now I can expect them any moment.
Week ago Youfibre told me that they was in talks, but nothing happened. But, he told that I can leave them if they decide to sell it. So, also, if they will sell it to Virgin, I’m gone.
I’m bit lucky, have OR FTTP and Cityfibre also building in town.
Just FYI absolutely none of your or anyone else not directly involved’s business the state of talks between the company and possible investors. He told you everything he could.
No legal obligation on the company to allow you to leave a contract early with a change of ownership. They often do but no legal requirement as long as they don’t change the terms of the contract to your detriment.
I know a fair few YF sales reps – and they were all told by e-mail at 10:51am today.
So no one knew then beyond rumours.
This is a big shake up for the altnet market. Will VmO2 use it to wholesale there Xgs pon network so others can use it . One of the problems altnets face is they over built each other so if you go after another altnet how much of the areas you acquire you already have your own footprint. . How many altnets use VMO2 to carry there backhaul traffic? . We read on constant basis the issues that the smaller altnets face so who will be next to merge get bought out
If I was one of Netomnia’s owners I would be looking for a cash buyout with it’s relatively low debt levels & it’s unfortunate that VMO2 is best placed to offer this. Both Netomnia & CityFibre seem to have large amounts of overbuild with VMO2 so a consolidation between the 2 would be the last thing VMO2 would want. You would hope that the CMA would step in but seeing as how pathetically useless all the regulators are in this country I’m not holding my breath.
Very disappointing if this goes through.
Doubtful if CF could match the combined clout of both Telefónica and Liberty Global though.
Hope it gets referred to the CMA, but I’m not holding my breath on that score.
They could. Easily. Their backers are Saudi Arabia (Mubadala) and GoldmanSachs, the biggest pockets in the world that even KKR couldn’t touch. But as always it depends on business plans and debt management.
Infravia are birdseed in front of these people.
@ jav:
The three businesses involved in the offer need no external funding. They all have multi-billion Dollar acqusition funds that cover the offer.
the issue is that Virgin Media O2 have their own nexfibre system but that isn’t wholesale. (Giffgaff being O2 owned).
As for the overlap is that 70% overlap Nexfibre to Netomnia? or is it Virgin HFC to Netomnia? if it is the latter (And I suspect ti is), this will overnight push quite a chunk of users onto complete full fibre and accelerates their plan to remove HFC. The flipside is they will gain customers in non VM areas.
The issue that many face now is that knowing VM02, customers who are with BRSK/Youfibre may well be migrated.
Poor because on Nexfibre, theres no modem mode and no ont either (it’s in the SH5X), you have to use an ont on a stick (sfp module) which isn’t supported in any way (against TOC i think?).
I think the point about VM HFC and Netomnia’s network overlap is crucial here. In my area VM is all HFC, and there is substantial Netomnia presence. It feels like an obvious choice to move existing customers from HFC to the Netomnia’s FTTP, then decommission the HFC.
There is relatively little overlap between the Nexfibre and Netomnia networks. This seems to have been intentional. The acquisition brings gains to the Nexfibre operation in terms of service capabilities as well.
No-one’s getting migrated to HFC.
I can’t see how it makes sense to move customers using VMO2’s ducts to all use fibre that’s in Openreach chambers, on Openreach poles and that goes back to equipment in Openreach exchanges.
Nexfibre are already using Openreach PIA so that may not be a problem as such.
agreed – and makes a quick move to push FTTP and start decomissioning HFC. then whatever is left in terms of HFC can be upgraded easier either by nexfibre or the acquired netomnia.
Always knew Jeremy would sell out.
It’s business. Netomnia has numerous shareholders who probably see this is a an attractive opportunity to positively exit a very challenging market. Altnets are struggling and consolidation is the name of the game. Jeremy, to an extent, steers the ship but money talks.
Are you surprised? Its not a charity, got nothing to do with the individuals. They started a business, risked their capital and time. Why is it a surprise when founders sell out, they are good at starting business, they have a lot less interest in running an organisation longer term.
Zen is probably the only ‘exclusion’ to that rule. We all know Richard will never sell for reasons which are well known / published.
Hate to break it to you but the company isn’t Jeremy Chelot’s personal property and he doesn’t have a veto on whether it is sold or not. The investors who paid for equity literally purchased bits of the company, that’s what equity is, and with those shares wanted some control.
It’s Netomnia’s investors, not Jeremy that has the final say on this. The fact that VMO2 are offering £2bn vs £1.6bn investment & debt that has been spent, on the face of it gives the original investors the chance to walk away with a profit which would probably prove to be a pretty rare win in the altnet world.
It likely isnt his decision, the offer goes to shareholders.
Its a shame, it better if CityFibre got Netomnia, as the worst to happen to an innovator is one of the big boys to grab it.
God sake there goes the gigabit provider that charges you a palatable price along with symmetrical speeds without the mid contract price hike!
Says who?
Says it customers who were sick to death of incompetent VM milking them with grossly over priced services and way below standard customer service, along with desire for their own (rubbish) hardware for access only.
Interesting. VMO2 will likely be able to buy one of either Netomnia or Community Fibre. For VM I’d have thought London would be a better market to own and capitalise on so my guess as a fit for them would have been Community Fibre, leaving City Fibre to get Netomnia. For City Fibre it’s pretty existential to buy either of these two if they want to realise their dream of being a serious wholesaler post 2030 with the following predicted market, once you include the retail side of strategic alignment as well:
Pillar 1: Openreach with 31 million premises and EE for bundling mobile with 10.5 million customers active; £3.1B revenue
Pillar 2: VMO2 with 23 million premises having bought Community Fibre and Virgin Media & O2 leading retail, 7.8million customers and estimated £4.2B revenue
Pillar 3: CityFibre + Netomnia with 12 million premises, VodafoneThree and Sky as primary retail with 9.2million customers and estimated £4.5B revenue
It goes to show why CityFibre bent over backwards to get Sky to resell their network and that their 8m build target is actually too low. However confusion reigns in that Vodafone have already partnered with Community Fibre leading to speculation that VMO2 will indeed get Netomnia and CityFibre gets Community Fibre (and finally de-ambiguate the abbreviation of ‘CF’ in the process).
Expect to see a lot of bundling mobile and broadband nearer 2030. But I also expect to see both Netomnia and Community Fibre sold in the next 18 months or so. By 2030 it’ll all be consolidated. Exciting times.
This is a very good summary.
The fact that everyone in the comments is disappointed just shows how good and reputable netomnia are..
Hooray… Inflation busting annual price increases and crap CS…
The only thing I can think of is they are doing this to kill the competition, not expand their fibre coverage. If the overlap is 70%, they buy the FTTP network, which is in the OR/BT duct. So do they keep it where is it, and eventually abandon their own duct network, which is the most valuable asset. Or do they the move the Netomnia network into their own ducts? If they do that they may as well just build their own network.
Really doesn’t make any sense from a technical perspective, just seems they’ll buy want to kill the competition
Is that 70% mostly coaxial? Imagine they would eventually abandon their ducts in streets where Netomnia already present on overhead cables. digging gardens is expensive
Not as expensive as digging the roads to lay duct. But yeah I imagine the majority of the 70% overlap is HFC, but when the duct is your biggest asset, why would you abandon it to take on the lease liabilities of the Netomnia fibre when a few foot away you have your own duct. Short term it is a a quick fix, expend their PON network massively overnight, and also eradicate a rival, long term makes absolutely no sense at all. Personally to me this reeks of desperation to get rid of a company cannablising their customer base
Trouble is, Netomnia failed to build in ALL the streets where VM’s HFC was. It was patch-work network – often waiting for BT to do their stuff first before Netomnia moved in later to do their work.
This is classic kill the competition because Netomnia started to eat in those VM areas because of no milking the customer, no in contract price increases, re-contracting customers get access to new customer prcing – basically the last two things VM hate and never offer.
£80.47 is the out of contract price for GIG1 on coax with VM after April 1st and every year they want to add £4 increase. Absolute rip-off. The contracts are also 24 months with them now too.
There is relatively little overlap between the Nexfibre and Netomnia networks
This would be extremely disappointing. I have been happy with YouFibre/Netomnia but would be considerably less so if Virgin Media took over, they are poisonous and ruin everything they touch.
That is a shame if it does happen, VM is another large company like Openreach and just like Openreach want to control as much as they can.
it is all about knocking out the competition.
This is panning out pretty much as I expected. I am of the opinion that the acquisition will be folded into the Nexfibre operation rather than into the heritage business.
This also comes as Telefonica has indicated recently that it intends to assert greater influence over the Virgin Media/O2 JV so as to align vmo2 with the Telefonica strategy being rolled out elsewhere in Europe.
Yup – YF Sales reps are being told about Nextfibre today – not many knew about it to be fair
What are they being told about Nexfibre?
The whole alt net approach was flawed, whilst I agree with competition the issue is overbuild and such.
Infrastructure like ducting and such should be centrally owned.
Toob stopped building in my area, so nothing changed. VM or ADSL based providers. Billions spent with little progress in reality.
Welcome to the UK as we slide further
Little progress apart from the vast majority of the UK now able to access a gigabit capable service in a little under a decade? Got you.
Mike,
I agree with your comments re ducting, etc. I would go further – see http://firstmilenetworks.co.uk/Public/Those That Fail.pdf
“Infrastructure like ducting and such should be centrally owned”
Why?
We have BRSK and Cityfibre planned, I am planning to move from Virgin to BRSK next month, if VM manage to get their hands on Netomnia then when cityfibre eventually gets to my street I’ll move.
I don’t personally have a issue with the VM network it has always just worked but their pricing is an absolute shambles.
Bad news for you is that CityFibre already announced last week that outside of Project Gigabit they were stopping build and making 400 staff redundant!
Hullensian, Time will tell but Cityfibre have been building around here for some time, it’s already available in many streets just not mine.
If they don’t get around to it and VM buy Netomnia I will likely use giffgaff instead of VM unless more providers jump on.
This news is so disappointing, Netomnia, one of the best Altnets, going to be swallowed up by the really awful Virgin/O2, don’t have to look any further than the comments on here to see what most think about this nearly signed deal. Netomnia were supposed have started building in my area last year, was looking forward to that, something now that will never happen, as Virgin have already a large footprint.
Same for my area but they put Brsk here instead – and I am being told the merger should have been last year! Maybe they stopped your area in antipation?
@Simon: I was thinking the same, just as you have suggested.
The overbuild would be used to convert HFC to xgspon and would save virgin issues on the fibreup/Mustang project. Virgin and nexfibre are proactively working in wholesaling the whole xgspon network. Id imagine the deal would allow the existing ISP’s to remain and allow further access to whole of the nexfibre/vmo2 network. The line would be virgin but the iso doesn’t need to be. This seems like a massive win for Virgin if it happens.
Upto now you only have giffgaff on the wholesale network, hopefully if this happens more ISPs will join but if not and I am forced to use their fibre it will be through another ISP.
I’m planning on getting BRSK installed next month and ditch VM
In 2024 the CEO of Netomnia said “Netomnia will be the third national fibre infrastructure in the UK”.
I wonder if he still believes that?
He will see it as second place now due to VM integration.
What they don’t realise is the Netomnia/BRSK/You Fibre customers will be off as soon as they can after VM acquisition. I’m already planning an escape plan for rest of family. No way they are staying with VM.
Lets hope useless BT get XGS-PON and symmetric going, I won’t hold my breath though as their “trials” may not come to fruition after something like this, or take another 10 years to implement.
I can see your business acumen is low.
Bob,
You don’t know me. This is an internet forum and nothing else.
You could have a vested interest in the sale for example or be someone connected with BT or VM.
Business acumen is a different thing to stating from a consumer side of things for a start! Business is just money and profit in simple terms. Screw over whatever to get it.
Seeing as a lot of Netomnia’s network is overbuilt with VMO2 HFC, the logic would be that if Netomnia gets integrated into Nexfibre then VMO2 could also integrate its own Project Mustang build into Nexfibre & slowly abandon its own HFC as Nexfibre builds out leaving Nexfibre as the wholesale network & VMO2 as the retail ISP.
And still be useless if the Nexfibre wholesale still milks ISPs/Customers with pricing. They just charge it on, regardless of one ISP or 100 ISPs.
This is concerning to me. It’s VM RFOG here and Netomnia XGS.
The choice is keep XGS and pay OR PIA costs or move everyone on Netomnia over to RFOG through VMs own ducts with the idea to swap it to XGS later.
Im going to loose symmetrical speeds aren’t I… and pay about £10 a month more for the privilege.
Probably not, no. They’d most likely leave everyone as is and merge it to VM XGS since the infra is already there through Netomnia.
I doubt they would put people on RFoG, it would just become part of nextfibre.
So annoyed at this.
I got into a virgin media broadband contract only because they were the fastest around here, even though I really had to think twice, dont want to be saddled with slow internet from Openreach.
Once I signed up and got stuck in contract, BRSK then decided to install all round here. Was hoping to jump over to BRSK when my contract ended, as im fed up with virgin.
This just ruins my plans.
This deal makes no sense, we are all avoiding VM.
VM is not involved in this transaction.
If the CMA allowed Vodafone/Three, then I can’t see them blocking this.
They won’t, they never work in favour of public. I suspect brown envelopes will exchange into some greedy hands.
All this money spent, for the same old dinosaur companies – the ones that got the UK in this mess through lack of investment, to end up controlling everything. Sums up this cess pit of a country at the moment – BROKEN.
MNO mergers got more attention because there are only a few of them and it’s a decision that won’t be reversed, either literally or practically through the rise of a challenger. Going from 5 to 4 to 3 MNOs is an explicit decision.
Altnets don’t have that same issue. We already have far too many and consolidation is the only way they have a chance of surviving against OR and VM. Netomnia is an insignificant operation in the grand scheme of things and therefore no one’s going to step in the way of it being bought out by someone.
SMP won’t apply here given the massive overbuild, though I suppose there’s an argument that the CMA should seek for VMO2 to clarify whether they will continue to upgrade their HFC network to FTTP in these areas, and to look at selling off one or the other. Perhaps it’s also time to get a statement about the VMO2/Nexfibre association on paper too.
A “dinosaur company” owns the largest and most financially successful fibre network in the UK. Clearly they’re doing something right!
As I said before, if BT started when the ALTNETS started they would already be out of business due to inferior product offering.
The only reason they are the most successful, is because the GPO then BT were around for decades and had no competition until early 90’s with cable telephones then cable broadband. That’s the only reason. Had they been a startup like the ALTNETS at the same time, they would be mere dust now.
The altnets had a head start on FTTP and yet Openreach’s take up is markedly higher. Weird for an ‘inferior’ product, eh?
BT have more money and engineers and ducs and poles and so on.
Simples!
That would affect rollout and coverage. Not takeup.
Take up is because of a brand that’s known for 40 odd years. People in this country are also lazy to switch, not all hear about ALTNETS or know they are in their area, some get bribed by contract renewal of upgrading from FTTC to Full Fibre to stay with their (Openreach based) ISP. BT had a huge head start in this respect.
If this takes the next biggest altnet off the table for cityfibre and cityfibre aren’t building anymore, how will they scale without a forming a patchwork of really different networks held together with glue?
VM has been overbuilding its HFC for almost four years with a target completion of 2028 (this is Project Mustang). In the network not yet overbuilt there may be Netomnia fibre but which VM could not reuse as VM’s fibre utilises its ducts and is routed through VM’s newly-built cabinets for XGS-PON. So, the acquisition is not about reusing Netomnia’s fibre, it’s about buying scale instantly and a defensive strategy to stop a serious competitor. So, what would happen is a deal is approved?
Scenario 1. Keep Netomnia legally and operationally distinct but gradually migrate Netomnia from a standalone operator until it becomes a network division supporting Liberty Global’s UK network strategy. Liberty Global would love it but CMA would not, seeing it for what it is: a hostile gradual acquisition disguised as ring-fencing.
Scenario 2. Ring‑fenced Netomnia with asymmetric wholesale, i.e. VM buys wholesale access from Netomnia in Netomnia‑only areas (but with no reciprocal access) and retail brands (YouFibre, Brsk) stay intact. This is the cleanest operational model with two separate networks running in parallel which CMA would have no problem with as genuine competition is preserved but Liberty Global would certainly not love with both VM and Netomnia continuing expensive build projects.
Scenario 3. Wholesale the VM and Netomnia networks and allow ISPs to use them. CMA would love it due to zero competition concerns especially as OFCOM has much experience in regulating this kind of thing, but Liberty Global would be unhappy about a major strategy change. This looks the least likely to happen unless forced by regulators.
What we might see is scenario 2 (ring‑fenced Netomnia) in the short term with a move to scenario 1 in the medium term to achieve platform convergence.
I predict Scanario 3. Ofcom would much prefer wholesaler agnostic services available to all and I’m 98% sure they’ll demand that from VM. Plus VM are already structuring next fibre to be a wholesaler hence why it’s not part of VMO2 but a separate entity much like Openreach is for BT.
I’d be inclined to agree with you except that the planned wholesaling of VM’s network, known as NetCo, was abandoned in 2025. To be clear: this was going to be a separate company with its own board (like Openreach) and quite different to the business unit wholesaling arm which has replaced it. If NetCo was still in existence now, CMA could reasonably say: “You already operate a wholesale fibre company. Netomnia should be folded into it and opened up.”
That becomes hard to resist once you’ve conceded the principle of structural separation. However it’s a lot of work to recreate a NetCo that encompasses Netomnia as well, and I doubt whether CMA will push for it.
Jeremy deserves a lot of credit but I hope they look after the employees that helped build the company instead of more redundancies, especially in a time when labours tax attacks are destroying employment
With a VM/Netomnia overbuild rate of between 50-70%, it’s pretty clear that Virgin aren’t buying them for the scale – but to remove a piece from the board. The CMA should block it, but they probably won’t. Netomnia should sell to CityFibre, but they probably won’t, because VM are likely offering hard cash as opposed to CityFibre likely offering equity.
The overbuild rate is over 75% at the moment. VMO2 would gain 700,000 premises they don’t currently pass and 2.3 million in areas where they have ducts and some full fibre, with 450,000 customers.
They should have a quarter to a third of that 2.3 million upgraded with full fibre, the rest may be done at £90 per premises so deduct that from whatever they are considering paying.
That’s a lot of money per customer and premises. Whatever could their motivation be for paying so much?
There is relatively little overlap between the Nexfibre and Netomnia networks. That is the focus of the acquisition.
Further, it is anticipated that Liberty Global will start selling down its holding in the joint ventures.
A really interesting strategy from VM02.
I actually think CF is the ultimate goal here. Denying Netomnia from CityFibre will massively undermine CFs investment strategy, making them much easier pickings in the next few years as they struggle to achieve any meaningful growth.
If VM02 don’t buy Netomnia and CF buy them, when VM02 finally come to buy CF, their price tag will be much higher.
Agreed, its as much as blocking CF from growing as it is about acquiring. Those of us in the industry arent surprised at this and that CF was always going to struggle as they didnt have the cash to stump up.
Do you take £2B of cash or do you take £2.5B (Fictitious numbers for the sake of an example) in the form of cash and equity when you know full well that the equity value will be diluted at the next fundraise …. so unless the cash element was substantial, you suddenly have no control over what happens with your left over value (equity) in future.
One of the comments was ‘I hope they look after the staff’. My understanding, being close to some of the team are that most, if not all have some level of interest / equity / shares. The earlier teams would likely have more as they joined early when it was still risky.
But no doubt, jobs will be lost in a difficult enough economy already.
Competition is Irrelevant for many of us who live Outside of Towns & Cities in the UK. Many are lucky to get any FTTP service at all and are reliant on Copper for the foreseeable future. Excluding Starlink, which many refuse, because it’s mercurial owner Musk. Has already shown he is capable as in UKraine, of ‘disabling Starlink service’, for long periods at the whim of whatever side of bed he got out of that morning. We cannot have Massive Left behind Rural areas, and everywhere else with massive Overbuild. That leaves the companies operating those Overbuilt FTTP networks without, viable long term businesses…
Nobody with sane mind would pay £2Billion for Netomnia
£2bn works out at £667 per premises passed. A lot of altnets have spent much more than that installing their own network.
Much of those premises are already passed. If you exclude these and cost per additional premises passed it looks somewhat different.
But how much of that is HFC? If a high proportion is then VMO2 would have had to replace it anyway.
It’s costing them less than £90 a pop to upgrade the HFC premises to XGSPON.
Much cheaper for Virgin to upgrade on their own network. As well as more efficient as you are only spending money where you have take up.
WHAT?
NO. PLEASE GOD NO.
It’s interesting because here currently, Netomnia are expanding to new addresses in my area that already have access to VM.
Is there much point?
What wonderful news to go with our looming redundancies.
God no…. if vm take over then its back to OT based networks..
Well that is me out then, been waiting years in anticipation of getting YouFibre, finally went live in my road in the last couple of weeks, but will be choosing an OpenReach provider instead, as there is no way I want anything to do with VM O2. Mismanagement by VM coupled with taking the private equity poison pill will see Netominia bankrupt in a couple of years.
As much as this is an interesting development at least it’s not AllPoints Fibre Networks and Fern purchasing it.
The consolidation of altnets is going to continue, the question should now be who is next and when
Mark my words – VM are going down badly just like Mocrosoft did. But, for me, I don’t care anymore from both VM and Microsoft.
Stick with Openreach FTTP and Linux PC.
I’ve just started making the transition to Linux this week. Fully replaced Windows with Linux Mint on my laptop and dual boot with my desktop. Given the political situation in the US it may well be a wise move.
Microsoft went downhill since Gates stepped down and now iPhones take over the reason “family computers” existed many years ago. MS still make pots of money through business using licenced software when half of them only use it for chrome.
Microsoft has gone downhill but not because of your TDS
Many businesses now use entirely web based systems meaning that any device with a web browser can be used. Libre office can replace most of the functions of MS Office (as they have done in Denmark) & I bet a lot of the advanced functions of MS Office never get used anyway.
@Gary: TDS = Tangerine Daddy Sycophancy.
I’d switch to Linux if Acrobat and Photoshop were available, the Linux equivalents simply do not function as required. However I may try to get older [non subscription] versions of both to work via Wine, which may be a solution.
Already installed Pop_OS! on an older laptop which gave it a new lease of life.
@Jav
If, as you state, CF’s (as in City’s) backers have all this clout, then why are they not using it?
Unless City Fibre already has some secret deal, in the bag, with Community Fibre, then are they not taking a significant risk by not acquiring Netomnia?
If they don’t get hold of Netomnia, then don’t they have to get Community Fibre(?), at least if they want to remain significant post consolidation.
It all depends on how much risk and what the end financials they want to play with need to be. PE investors typically need an IRR (interest rate in the debt effectively) of 10-12%. If they are willing to take lower margin then City would get a bumper balance. If Mubadala were willing to accept half those returns over a longer period then I’m sure City would be flush again. What I actually foresee is a merger of equals kind of like how the Euro started. A set value of the business was struck based on its NAV at a given point and from there on the investor get that fixed percentage of a bigger pie. Either way, it’ll involve back room dealings with City’s investors, and it all depends on how much they’d swallow. It’s their money after all.
Don’t forget there is KKR behind Hyperoptic too. Hyperoptic could go to who ever doesn’t get Community in the capital.
Bear in mind that both Openreach and VM have had a massive kickstart that City has never had. Openreach was given the GPO network and still had a number of write offs in the early FTTC years that severely depressed BT’s margins. Meanwhile VM has benefited from a fire sale of CWcom/Teleweat/NTL and effectively their HFC network was owned by them at a massive discount to the actual build costs.
In this sense, City have had no such luxury, but they are smart. They don’t want to be the biggest. Just extract the highest margin and be the most nimble and efficient of the big wholesalers. Hence in my prediction, despite being the smallest has the highest take up and highest revenue.
@Jav
Very interesting.
Thanks for the detailed reply.
Liz
@Jav: You are broadly correct in that CityFibre’s investors can certainly deploy more capital but they won’t overpay for Netomnia. Whilst 10–12% IRR is absolutely realistic for mature infra PE it also carries a lot of risk which Mubadala is quite likely to be concerned about. Why would Mubadala tolerate lower returns as it would fundamentally change CityFibre’s investment profile.
I think you are being optimistic about a “merger of equals” where assets are of roughly equal quality – which is rare in telecoms.
Your point about Hyperoptic is right as KKR will absolutely sell Hyperoptic if price and structure are right – meaning nobody has to be panicked into buying Netomnia.
I think you overstate the “kickstart” benefit. Virgin Media wasn’t given a cheap network: its HFC footprint came from the consolidation of UK cablecos that were built, bought and paid for by NTL and Telewest. That messy legacy of non-standard networks then had to be stabilised, integrated and upgraded at huge cost, and achieving DOCSIS 3.1 across the entire UK network by end-2022 was an under-appreciated milestone. VM is now part-way through overbuilding its HFC with fibre for XGS-PON, a project not due for completion until end-2028. In the meantime Openreach as we all know is migrating to all-fibre GPON, a huge job with a trial for XGS-PON to be done this quarter. No altnet has such baggage and can start out by building fibre for their XGS-PON.
You say the CityFibre “don’t want to be the biggest.” I’d add some nuance: there must be a minimum viable scale, so I think their strategy is ““Big enough to matter whilst making good money”.
I don’t agree with “Smallest but highest take-up and revenue” as this cannot happen unless CityFibre can achieve markedly better penetration than its rivals whilst keeping both its margins and customers.
I think it’s fair to say the majority of commentators on this platform wouldn’t have Virgin Media as their Broadband provider, unless they had no other option. I would expect many to leave YouFibre and Brsk as soon as possible if this deal goes through. This all about keeping City Fibre in their place, as Vigin Media would see it.
* Virgin not Vigin. 🙂
You have just invented a new expletive!
From now on, I am going to call them:
Viggin Media!
Because they are, evidently, a “Bunch of viggin so’n’so’s.”
I loved YouFibre and really missed them when I moved house. This news is really sad and I think if the buyout happens I will stay away from them. I guess Jeremy just wanted to get filthy rich, fair play
I think that the acceptance of any offer will be down to the investment boards of:
Advencap
DigitalBridge
Soho Square Capital
I doubt that JC’s opinion will carry much weight in the matter, unfortunately.