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Virgin Media Boss Confirms Interest in Total UK Network Coverage

Friday, August 9th, 2019 (9:44 am) - Score 8,799

The CEO of Liberty Global, Mike Fries, has lent more weight to reports that sibling Virgin Media UK might be planning to establish an alternative network ISP in order to reach into the 10 million or so premises that their existing ultrafast cable and FTTP broadband network does not serve (e.g. rural areas, suburbs and smaller towns).

Last month saw multiple sources claim (here) that Liberty Global and investment bank LionTree were looking at the possibility of establishing a second Joint Venture (JV) business in the United Kingdom, which would form the foundation of a new ISP with Virgin Media as an anchor tenant on their network. This is apparently nicknamed Project Hermes.

The suggestion was that this could be used to extend 1Gbps+ capable Fibre-to-the-Premises (FTTP) connectivity beyond Virgin Media’s existing footprint and, we assume, keeping VM itself safe from the risk of being labelled as an operator with Significant Market Power (SMP) by Ofcom (i.e. avoiding the risk of attracting deeper regulation of their network).

The suggestion was that such a company could initially reach an additional 2 million UK premises, although it would need to attract a fair bit of private investment and potentially also public funding in order to achieve that or go beyond such an ambition (finding full fibre investment in this market shouldn’t be too difficult). Openreach’s existing cable ducts and poles could also be harnessed via Physical Infrastructure Access (PIA).

Yesterday’s post-results investor meeting did not specifically confirm the existence of Project Hermes but at the same time Liberty Global’s CEO made no secret of how seriously they were taking such an idea (i.e. the c.10 million premises outside of their existing UK coverage).

Mike Fries said:

So let’s just say that we are in the mix as we should be in any discussions about building the next wave of networks outside of where we already have built superfast broadband, we feel like our 15 million homes of 1Gbps ready, going to 10Gbps [in the future], is it for that footprint [Project Lighting].

But beyond that footprint, we’re going to be opportunistic to see if we can put capital to work off balance sheet without consolidating losses and activities. Potentially with partners, just to get Virgin possibly in the Virgin Media brand to a national scale, wouldn’t that be great, if Virgin was a national brand not a regional brand in half the marketplace.

We know our footprint, we generate 50% market share. We beat BT. We beat Sky on footprint, in video and broadband, we know that. If we could extend our footprint potentially using other people’s networks or participating in off balance sheet type network construction, that could be pretty interesting.

So it’s all very preliminary, and its work you would expect us to do. But abiding by the points I made in my remarks, which we’re looking at that opportunity at our capital efficient, optimized free cash flow and largely off balance sheet.

During that same meeting Mike also touched on this topic several more times, not least by saying that Liberty Global would be the “most important partner or platform” for anybody looking to tackle the “remaining 10 million homes.” Mike added that, “you should expect us to be exploring every alternative to creatively finance and participate in this expansion of broadband connectivity in the UK.”

Mike also said that the 4 million premises they originally targeted for their Project Lightning expansion the UK (so far they’ve completed over 1.8 million and seems set to continue extending until 2023) is “still attractive to us” and they’re evaluating “how to do that in the most effective and efficient manner.”

Finally, Mike “absolutely applauds” the new Prime Minister, Boris Johnson, for setting out an ambition to achieve total full fibre coverage of the UK by 2025. “On the flip side, we also agree with BT and others that this will be increasingly difficult and expensive for Openreach and undercapitalized fibre alternative networks to achieve, at least without substantial regulatory relief, which puts Virgin in an enviable position,” said Mike before pointing to their strong market position for tackling the final 10 million.

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By Mark Jackson
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 Twitter, , Facebook and Linkedin.
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13 Responses
  1. Badem says:

    So like the old days of Cable, many launches and only 1 man standing at the end… Reckon the same will happen again? VM being last man standing with just enough network on Cable and FTTP to prevent SMP rules applying?

  2. Oggy says:

    I had to double check it wasn’t April 1st.

  3. Granola says:

    They are going to provide fast broadband where there is no competition and it is not available already ?

    At last a provider is being sensible.

  4. AnotherTim says:

    “They are going to provide fast broadband where there is no competition and it is not available already ?”
    I have a suspicion that the statement “potentially using other people’s networks” suggests that they are thinking of an ISP reselling other networks (OR, Gigaclear, etc.) in order to bring more customers into the VirginMedia catchment. They currently cover 50%, which means 50% of the market isn’t available to them. They need to move into that other 50% to grow their customer base. VM are building where it is economic for them, but if they can use the Altnets’ networks they can gain customers without the capital outlay.

    1. A_Builder says:

      Or a hybrid approach of building some and piggybacking off other Alt Nets who will wholesale?

      At the end of the day they are going to have to continue to do some build outs.

      But I agree overbuilding FTTP is a bit of a mugs game where you can piggy back off the investment of others.

  5. dee.jay says:

    Put your money where your mouth is!

    I’ll believe it when I see it

    etc etc etc

  6. Marty says:

    I wish they would finish Great Yarmouth off, they started extending their coverage to parts of Yarmouth and it stopped 2 years ago. Was gutted, can anyone from ispreview find out if they are going to start again?

    1. Paul says:

      They might be starting GY next year. Different contractor with controls on cost in place.

  7. Malcolm says:

    They said they were coming to the Greenland Dock in London SE16 area years ago then they decided not to – bit like Hyperoptic actually.

  8. Roger_Gooner says:

    Presumably this new business will not be called Virgin.net.

  9. June Lally says:

    Since Liberty Global took over Virgin Media the service has become appalling along with a terrible customer service. One to be avoided at all costs. They cannot deliver the service they promise and you either have an awful time trying to sort it out, in some customers cases over months, or you keep trying to cancel your contract while they fob you off time and time again. The only way if you are not getting the service you are paying for is to cancel your DD, inform Virgin you have done so and tell them they are in breach of contract so you are ending it!!.

    1. CarlT says:

      Really don’t cancel the DD and tell them they’re in breach of contract as you are in breach of contract doing that. They can sue you and you don’t have a leg to stand on.

      The service is definitely not any worse since Liberty Global purchased them.

  10. Declan m says:

    Currently putting in ducts and cables in my street hope to have a decent fast service in the near future

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