Virgin Media O2 UK Reportedly Seeks Funding for FTTP Rollout
A number of reports have today claimed that Virgin Media (O2), alongside merger parents Telefonica and Liberty Global, will this week begin deeper discussions with the hope of securing investment for a new Joint Venture (JV) to fuel their long-held ambition to cover millions of additional UK homes with full fibre broadband.
At present Virgin Media’s fixed broadband network already covers around 15.5 million premises, although most of that (14.3 million) exists on their older Hybrid Fibre Coax (HFC) infrastructure, while the rest is via their latest Fibre-to-the-Premises (FTTP) technology. All of this is capable of multi-gigabit download speeds, although upstream remains a weak point where the use of DOCSIS is concerned.
The operator has also announced that it intends to upgrade all of that HFC to symmetric speed capable XGS-PON based FTTP by the end of 2028 (here), with trials already taking place at 50,000 homes in Stoke, Salisbury and Wakefield (here).
However, VMO2 has repeatedly also spoken of a future “ambition” to expand their latest FTTP network to reach an extra 7 million homes (here and here) – bringing them close to Openreach’s planned reach, which they previously said would be funded as part of a £10bn capex investment in UK fibre and 5G infrastructure over the next 4-5 years. But we haven’t had a solid update on that since the merger completed last spring.
According to several reports this evening (Sky News, FT), VMO2’s primary shareholders – Liberty Global and Telefonica – have opened discussions with investors to help raise “hundreds of millions of pounds” to support their FTTP rollout (this is far too low for it to equate to the aforementioned expansion plan) via a new “open access” style joint venture. Virgin Media would be an anchor tenant ISP on such a network (we suspect Sky Broadband may join them), which would become a separate company from their retail side.
None of this will come as much of a surprise to ISPreview.co.uk’s readers because we’ve been reporting on exactly this aspiration since 2019 (here). Virgin Media has also made no secret, both before and after the O2 merger, of its desire to turn itself into a wholesale operator like Openreach. But precisely what approach they’d take (i.e. only wholesale the FTTP part or HFC too), and when they’ll finally flick the switch, is still unclear.
As for the question of who might be willing to make an investment in such a venture? Back in October 2021 it was alleged that VMO2 were in discussions with Sky (Comcast) over a related wholesale and investment deal (here). Sky, which is the UK’s second-largest broadband ISP – albeit one without their own physical infrastructure (they gave up the idea of building FTTP some years back), have long been linked to such ambitions.
We’ve seen plenty of signs that Virgin Media has been ready – practically speaking – to go wholesale for a while, but securing the necessary investment and agreements from potential partners can be complex. For example, Sky Broadband might well seek some degree of exclusivity, which is understandable. But that does make it harder to secure support from other ISPs (CityFibre had a similar issue, until recently). Otherwise, the wait for an announcement continues.
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 and Linkedin.
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As I understand it this network will be separate from VM’s current network. It will be totally separet Open network that any ISP can use subject to paying a fee
I had hoped an announcement of this kind would address the countless areas partially covered by VM with streets missed. By the sound of it though this will concentrate on areas with hardly any coverage from them currently.
Just a shame.
I understand the frustration of those who can’t get decent broadband when their neighbours can. But I don’t see why they should be given priority over those in areas where no-one at all has it.
“I don’t see why they should be given priority over those in areas where no-one at all has it.”
Where there is already a significant VM presence you are less likely to get an alt net provider build a new network. The cost of infilling a network where there is already the backbone infrastructure, as is the case where VM are already present, is somewhat less than a new provider coming in and infilling the pockets of missing network.
In contrast, an area which has no FTTP/VM presence today is much more attractive to an alt net provider.
At the ned of the day these are commercial roll-outs and VM, Openreach & the alt nets can roll-out where their available funds and resources allow.
They aren’t going to build new HFC to areas that don’t have VM right now. Might be looked at again once the full fibre overbuild has been done.
Areas missed from the FTTP didn’t meet budget at the time and likely won’t now.
For the billionth time, majority of people do NOT NEED symmetric speeds
“For the billionth time, [the] majority of people do NOT NEED symmetric speeds.”
The power of marketing and the related ‘bigger numbers = better’ perception will, over time, skirt around that. But mostly this is good because it ensures that the underlying infrastructure is ready for the inevitable day when we do need more upstream. Since one thing has always been true of the internet – as speeds rise, then so too does demand and innovation of content and services.
@Hip Hip Hooray
None of us need cars that can drive faster than 70mph!
Why not offer higher upload speeds to those prepared to pay?
BTW I get 110 down and about 7 up but that suits me.
Similar stories to this have been released quite a few times, in different format, over the last three years. It quite often comes out around Telecom results reporting time, and seems to be followed by a good drop in BT’s share price. Stories like Comcast and Liberty in talks for Fibre partnership, or Virgin Media ponders opening up Network for Wholesale, etc, seem to be the format.
It says something that Telefonica and Liberty aren’t willing to fund this themselves, through the Bond markets; And I suspect VMO2, starting out with 18 Billion in debt on it’s books wouldn’t be able to go it alone anyway.
Just my opinion, but it appears to me, this was aimed at dropping BT’s share price going into the results, and this appears to be a repeating script.
Both the ongoing discussions with partners and the legal steps taken regarding the new entity disagree with you.
As I recall Openreach were looking for funding for their deployment until recently, and their costs come in lower than anyone else’s PIA or not.
Liberty Global have an existing joint venture with a private equity firm in Germany building FTTP and have been exploring divesting infrastructure businesses following the same model as the one proposed here.
I’m sure the timing isn’t a coincidence but doesn’t change that the work is in progress and the model is there.
“I’m sure the timing isn’t a coincidence but doesn’t change that the work is in progress and the model is there.”
I’m sure the story’s correct, but this is nothing new, and I seem to remember something like this being released previously. It’s already been reported that Liberty have hired Accenture to look at seperating the network from the TV business, but none of this is new, even the narrative about Liberty and Telefonica trying to raise funds from external parties, toward the cost of their FTTP rollout.To me, the FT article yesterday is just repeating old news, what’s new about this?
Bad news for altnets
Perhaps not bad news for all altnets given this vehicle will likely buy some.
All of this coverage seems to have come from the not particularly useful FT article, what I got from it is that VMO2 need money for expansion and rollout, not a suprise. Id imagine it will be some financial business since few ISPs will have the money.
Comcast, Sky’s parent, have a few billion lying around.
Maybe, Sky doesn’t have its own access network so Comcast might be interested. I can see AT&T having an interest, given their purchase of Warner Media they have deep pockets. The UK market is booming right now so I’d imagine some of the large overseas ISPs will want a cut of it, VMO2 gives experience of the UK market.
> Why not offer higher upload speeds to those prepared to pay?
They already do: you can get a 1G/1G symmetric leased line from Virgin Media business. You’ll have to be prepared to pay a lot more than a cheap residential service though.
Let’s lot bring business leased lines into this as those are a different kettle of fish, not least as you’re paying for an uncontended private circuit, usually backed by an SLA and various strong service guarantees. In short, leased lines aren’t just about faster upstream.
Some posters here just don’t understand the fact that not everyone uses the internet merely as a down-streaming service only. There’s more to the internet than video-streaming, web browsing or online-gaming. Professionals may not be the majority of users, but they form an important market-segment which isn’t currently catered for by VM nor by BT/Openreach. But that’s where many altnets stepped in. And it doesn’t always have to be a Gigabit connection, a simple symmetric 50/50 can often be more useful than an asymmetric 80/20 service.
I would challenge Hip Hip Horay to spend a week uploading 4K content to YouTube or cloud backup and then return saying still saying people don’t need symmetric speeds.
Sam B
Let’s say out of 1 millon users how many fall into the category of wanting to upload 4k videos and carry out cloud backups?
I’m not saying the use cases aren’t out there. I’m querying the amount of people that need it. After all demand drives products
“Comcast, Sky’s parent, have a few billion lying around.”
Since Sky and VMO2 compete for TV customers, why would Comcast go into partnership with a competitor?
This paragraph in the story.
‘According to several reports this evening (Sky News, FT), VMO2’s primary shareholders – Liberty Global and Telefonica – have opened discussions with investors to help raise “hundreds of millions of pounds” to support their FTTP rollout (this is far too low for it to equate to the aforementioned expansion plan) via a new “open access” style joint venture. Virgin Media would be an anchor tenant ISP on such a network (we suspect Sky Broadband may join them), which would become a separate company from their retail side.’
The open access model was mentioned at the time ‘Liberty Fibre’ was mentioned in the UK. Liberty Fibre has always been conceived as an open access FTTP network with Virgin Media as anchor tenant. It reflects the move by Liberty towards being an infrastructure provider seen across Europe. They’re building an open access FTTP network in Germany right now. There have been a bunch of stories in the press, including here, pointing to VMO2 spinning off the infrastructure into a separate business.
I’m surprised you apparently didn’t know this given your earlier comments.
“I’m surprised you apparently didn’t know this given your earlier comments.”
There’s more chance of Sky merging with BT than getting into a Fibre partnership with VMO2/Liberty Global, in my opinion. It isn’t like this hasn’t been aired in the press previously. Here’s an article from 2019, and what’s happened since, nothing I can see.
“Sky Broadband Consider FTTP Partnership with Virgin Media Sibling Monday, September 2nd, 2019 (7:39 am)”
https://www.ispreview.co.uk/index.php/2019/09/sky-broadband-consider-fttp-partnership-with-virgin-media-sibling.html
Two and a half years later, and the same rumours churn out of the mill. We’ll probably see the same rumour again in 2024.
Your opinion. I’m not privvy to details but they’ve been talking for a while on exactly this, years rather than months. I would assume that if Sky/Comcast are spending this time negotiating they are at very least interested.
@56k – Who needs a car that goes 70mph in reverse?