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Virgin Media O2 to Cover 23 Million UK Premises with FTTP Broadband UPDATE

Friday, February 18th, 2022 (7:29 am) - Score 14,640
Virgin Media O2 Engineer Talking to Woman

Virgin Media and O2 (VMO2) have today published their combined results for Q4 2021, which finally confirmed their long-awaited plan to extend the operator’s Fibre-to-the-Premises (FTTP) broadband network to cover around 23 million UK premises by 2027 (7 million more than today) via a new Joint Venture.

The announcement doesn’t tell us much, but it does confirm a lot of what we’ve been expecting for several years now. VMO2 confirm that they have initiated discussions with a number of potential financial partners regarding an opportunity to participate in the network build joint venture (major ISPs like Sky Broadband and TalkTalk, among others, have long been linked with this).

NOTE: Openreach’s own FTTP build aims to cover 25 million premises by Dec 2026.

The focus of the new entity (separate company to manage the network) will be on building a full fibre network of up to 7 million premises in new greenfield areas by the end of 2027 and Virgin Media will commit to being an anchor tenant on this. All of this will of course complement the existing plan to upgrade their existing Hybrid Fibre Coax (HFC) network – some 14.3 million premises – to XGS-PON capable FTTP by the end of 2028 (here).

The network will also be available to other ISPs on a wholesale basis, which will create a major competitor to Openreach (BT). “As this extends the company’s total gigabit reach to ~23m premises once completed, it provides [VMO2] with a clear incremental growth opportunity by offering services to a wider pool of customers and higher cross and upsell due to the increased overlap of fixed and mobile services,” said the results.

The Quarterly Results

Aside from the aforementioned announcement, we note that Virgin Media also saw their fixed broadband base reach 5,596,800 customers (up by 60.4K in Q4 vs 42.3K in Q3) and their full fibre broadband (FTTP) network added another 93,000 UK premises to its coverage (up from the 67K added in Q3).

Quarterly UK Customer (Connection) Figures – Q4 2021
5,596,800 Fixed Broadband – (up from 5,536,400 in Q3)
42,243,400 Mobile inc. Wholesale – (up from 41,638,200)

Meanwhile, the Project Lighting network expansion has so far reached an additional 2.7 million premises since it began some years ago (c.1.5 million via FTTP and the rest as Hybrid Fibre Coax), and their quarterly pace of build appears to have recovered from last year’s slump.

Project Lightning Rollout Since 2017
Q4 2021 = 93,000 Premises
Q3 2021 = 67,000 Premises
Q2 2021 = 89,000 Premises
Q1 2021 = 80,000 Premises (impacted by COVID-19 lockdown)
Q4 2020 = 115,000 Premises (some impact from COVID-19)
Q3 2020 = 125,000 Premises
Q2 2020 = 93,000 Premises (impacted by COVID-19 lockdown)
Q1 2020 = 93,000 Premises (some impact from COVID-19)
Q4 2019 = 154,000 Premises
Q3 2019 = 119,000 Premises
Q2 2019 = 130,000 Premises
Q1 2019 = 102,000 Premises
Q4 2018 = 144,000 Premises
Q3 2018 = 109,000 Premises
Q2 2018 = 118,000 Premises
Q1 2018 = 111,000 Premises (likely impacted by heavy snow)
Q4 2017 = 159,000 Premises
Q3 2017 = 147,000 Premises
Q2 2017 = 127,000 Premises
Q1 2017 = 102,000 Premises

NOTE: Virgin’s fixed network covers a total of 15,649,900 UK homes passed.

Interestingly, VMO2 said they expect to build FTTP to more than 500,000 premises in 2022, which would reflect a gradually increasing build rate of approximately 125,000 per quarter. But to reach 7 million extra premises by 2027 they’d need to be building at a rate of 1.4 million per year or 350,000 premises per quarter. In other words, we expect the build to ramp up much higher than this.

The latest results also included a few additional bits of interesting information. The average broadband speed on Virgin Media’s network is now 214Mbps, and 45% of their broadband customers take a mobile plan. The operator also saw a 93% reduction in Virgin Media complaints in 2021, with improvements in customer satisfaction (NPS). Overall, VMO2 invested £2bn of capital in network infrastructure and customer experience in 2021.

On the financial front, VMO2 reported total transaction adjusted revenue of £2,720.2m in Q4, which is down from £2,739.3m at the same time last year.

Lutz Schüler, CEO of Virgin Media O2, said:

“In a historic year for our business, which saw the completion of the UK’s largest ever telecoms merger, we stayed focused and finished 2021 on a high.

We saw sustained subscriber growth across fixed and mobile as the demand for fast, reliable connectivity remains, and delivered an increase in profitability while investing more than £2bn in our network, services and future growth drivers.

As part of our mission to upgrade the UK, we expanded our 5G coverage, completed our gigabit rollout as promised, and we now plan to extend our footprint to ~23 million premises through a new fibre venture being set up by our shareholders.

We’ve started this year by being the only big four mobile network to not reintroduce EU roaming charges. This challenger spirit runs deep across the organisation, and we have every intention of building on this energy and maintaining the momentum we’ve built up.”

None of today’s news will come as too much of a surprise to ISPreview.co.uk’s readers because we’ve been reporting on exactly this ambition 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.

However, today’s announcement doesn’t tell us precisely when the new wholesale solution will be launched or confirm which ISPs are going to support it (other than Virgin itself). This suggests to us that the agreements have probably been reached (i.e. enough to make them confident of confirming the plan), but that the final details haven’t yet been formally signed off by all the players.

One of the biggest question marks over this is the issue of exclusivity. For example, some ISPs might well seek some degree of exclusivity of access, which is understandable. But that does make it harder to secure support from other ISPs (CityFibre had a similar issue, until recently) and that in turn can impact issues of take-up and promotion etc. No doubt more details will follow later in the year.

Nevertheless, VMO2’s move today is significant and one that could have a big impact on the current market, where Openreach has traditionally been the most dominant player. In one fell swoop, VMO2 would create a major rival at wholesale, which could change both the competitive and possibly even regulatory dynamics. But much will depend upon how competitive, flexible and accessible their products are for ISPs to take.

UPDATE 10am

We’ve been talking with VMO2 a bit in order to better understand the structure they’re adopting for wholesale and how they’ll handle the FTTP vs HFC split on their network. Firstly, just to confirm, the new entity being discussed by their shareholders would be independent of VMO2 (albeit with VMO2 as an anchor tenant).

However, although the new JV will be a separate entity, the commercial benefits of having around 23 million premises across the country will still be captured. According to VMO2, these potential wholesale customers would be offered access to the new separate fibre JV as construction of the FTTP network takes place. In addition, VMO2 itself has the “option” to offer wholesale services to its existing 15.6m premises.

UPDATE 11:53am

Just to clarify, the above means that the 15.6 million (HFC and RFOG FTTP) built so far will stay with VMO2, which we’re told also includes the Project Lightning build for 2022 – there are no assumptions or plans relating to spinning this existing network into the new entity. The focus of the new fibre entity is thus on accelerating new FTTP build with a possible financial investor, which is being led by their shareholders.

Essentially, they are saying that the new fibre JV (entity) for 7 million premises will offer wholesale, but there’s also the option for them to wholesale on our current footprint (HFC or FTTP). We strongly expect this to happen, but it may not occur at exactly the same time.

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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.
Leave a Comment
41 Responses
  1. LPP says:

    Will be interesting to see if them going wholesale on this scale will open them up to PIA the same as Openreach. I personally don’t see how a company this size qualifies for PIA as they’ve taken up pole & duct space away from the smaller suppliers such as Jurassic down here in the South West.

    1. Mark Jackson says:

      There’s a generally big question mark over the different ways that VMO2’s move could impact PIA, particularly in the regulatory sense. But Ofcom’s next review isn’t due for a few more years and so, right now, VMO2 have the same ability to harness it as everybody else.

    2. anonymous says:

      If they were prevented from using PIA it would breach the Openreach terms that all operators have equal access to their network.

      I suspect it would need Parliamentary action.

    3. Bob says:

      With OIA it seems to be who gets their first. It then depends on how much duct space there is I would guess. Longer term a lot of duct space will be freed when the network goes all VOIP as I would guess BT would recover the old copper. It is worth a lot and if left in situ a lot would get stolen

    4. Sam says:

      Virgin Media have been using PIA since 2020. Most of the new build areas utilise PIA.

      https://www.ispreview.co.uk/index.php/2021/03/virgin-media-uk-hails-pia-and-rapid-fttp-rollout-in-swadlincote.html

  2. Phil says:

    VM existing Hybrid Fibre Coax (HFC) network – some 14.3 million premises – to XGS-PON capable FTTP by the end of 2028 – no chance in Telford.

    1. Bent says:

      No chance In Telford with 5g fully blanket by 2028 either all uk mobile network 2 slow to roll out 5g stuff virgin media they a rip off merchants

      All the uk networks needs to speed up rollout of 5g and improve 5g backhaul to mmWave 5g like they do in USA.

    2. anonymous says:

      What is so special about Telford that VMO2 won’t upgrade it? Think it was built in the same way as a bunch of other areas way back when and should be all good?

      No need to be quite so pessimistic.

  3. New_Londoner says:

    Considering the planned coverage of 25 million premises by Openreach by the end of 2026 together with the 23 million premises by Virgin, this probably means that approximately 80% of the UK will be served by two networks. A sizeable percentage of the rest should have coverage by at least one network with the £5bn government subsidy.

    I suspect that further fundraising by altnets will become pretty challenging and that some of the existing funding which has not yet been released may become rather harder to access. No doubt consolidation amongst the altnets will be accelerated by this announcement.

    1. Mark Jackson says:

      Hopefully AltNets and their investors will have been expecting this, since it’s been somewhat of an open secret for the past 2-3 years. But consolidation is already widely expected, and the urban-focused altnets are already conscious of overbuilding both OR and VMO2. So I’m not sure if today’s news will accelerate anything that wasn’t already envisaged, but we’ll see.

  4. Ex Telecom Engineer says:

    This is old news, in relation to VMO2 initiating talks with Financial Partners for a new entity. There has also been similar articles, last year, talking about Liberty and Telefonica talking to potential parties for funding the new entity, with VMO2 as an anchor tenant. Maybe VMO2 should now only advise when they have the funding in place, rather than repeating old news.

    1. Mark Jackson says:

      The difference being that they’ve actually confirmed it, as opposed to the reports being based on “sources” and thus unconfirmed.

  5. Jack says:

    Why is this the case? Does it make it easier or more viable for Virgin if an alternative turns up?

  6. anonymous says:

    They can use PIA once they’ve overbuilt the surroundings with FTTP. They already use PIA to extend in areas they have FTTP now.

  7. DJI says:

    Will I have to let them dig up my property? I really hope not, they made a pigs ear of it last time when they put the copper cable down.

    1. Bob says:

      Alt nets are not very likely to move in to infill a few homes left out it would not be economic to do so

      The best hope is to chase whoever put the fibre in

  8. Zed says:

    So Virgin plan to ramp up from current new FTTP build of 80k /q to 125k /q in 2022 and 350k /q in following years. Plus they plan to upgrade their existing copper network to FTTP at a rate of 600k /q.
    ie going from 80 last year to 950 next year.
    Can they really do this, without buying existing networks?

    1. The seer says:

      I think altnet investors are banking on this buy up. The money will be there and altnets will most likely be sending emails to vmo2 today with schematics of what they have built and a price tag.

    2. anonymous says:

      They are already surveying the smaller networks. If they don’t buy them CityFibre will.

  9. Jack says:

    In some areas they missed out, BT ducts were available to use but they didn’t use them. Certainly the case with my area. Or do you mean if an alternative digs a trench they could use that instead?

  10. Jack says:

    I find it all very confusing. In my area they dug their own trenches in most streets, and in newer build sections they used a mixture of BT ducts and their own that were there previously but weren’t used for some reason until recently.

    A random handful of streets that were on the other side of the road or adjacent to one’s that they serviced were just left even though BT ducts were available. Maybe there was a reason they wasn’t used. Probably reached the budget for the area in question. Frustrating though.

    I’m hoping Openreach or one of the alternatives will fill in the gap left with their rollout. Otherwise it could leave random houses behind forgotten about.

  11. Anon says:

    So to clarify, if I’m in a “Virgin” area at the moment, that says it’s previously had Virgin (the old HFC), but the cables were all removed by previous house owners when they had the driveway done… would they still install HFC again now, or would it be FTTP?

    1. drevilbob says:

      If it’s an HFC area then they would pull Coax to your home otherwise it would be FTTP.

    2. Declan m says:

      From what I have read it would be FTTP

    3. drevilbob says:

      It won’t an area that that’s currently HFC will have a HFC cable pulled from the cab as virgin’s FTTP at this point in time is basically DOCSIS over the fibre so they won’t blow fibre to area which already has HFC cabs plumed in.

    4. anonymous says:

      Until they’ve upgraded the area there’s nowhere for FTTP to go. Pretty unlikely that the cabinet serving your property has any fibre going to it and even if it did it’s being used for the hybrid network or is spare for leased lines / metro network / node splits.

    5. John says:

      If it’s coax (HFC) running down the street and a resident rips that out then it must be coax that goes back.
      They can’t just make it FTTP as there’s nowhere to connect the fibre to as the surrounding area is all HFC.

      Anyone with HFC currently can’t have it changed to FTTP until Virgin upgrade the surrounding network and make changes to the cabinets.
      This is currently being trialled in a couple of areas.

    6. Anon says:

      I’m curious about this as well, I know in the past I’ve had abysmal service at peak times on the old HFC in my area due to congestion. So much so that the consistency of openreach at 50-70 was preferable to the headline speeds by VM. I’m happy enough with my 50-70 but I’d happily pay the first person to lay FTTP, never HFC again for me personally. Is there a way to tell when VM have swapped to FTTP for an existing HFC street, surely if they are doing so many upgrades, they want a return on that investment (so would be sensible to advertise it)

    7. John says:

      As mentioned already their FTTP is just DOCSIS over fibre.
      It’s the same DOCSIS bandwidth being shared amongst local residents on HFC as it is on FTTP.
      They can just as easily oversubscribe an FTTP area.

      You would need to wait till they change their FTTP from DOCSIS to XGS-PON to see any benefit over the HFC network.
      Currently they are functionally identical.

  12. Bob says:

    That claim does not correlate with the number of UK homes

    As of 2018, the total housing stock in England amounted to almost 24.2 million dwellings. So today that probably about 25Million Homes

    It seems to imply they already cover about 65% of UK homes which seem to be highly unlikely

    1. anonymous says:

      A reminder they talk about premises not homes.

    2. Winston Smith says:

      You’re conflating England with the UK. There were 27.3 million homes in the UK at the end of 2017 according to the ONS.

      Assuming that there are now around 29 million premises in the UK and VMO2 claim to pass 15.6 million premises, that’s around 54% coverage.

  13. Bob says:

    PIA means the al nets have paid BT to uses their ducts and poles. If they find a blocked duct they are permitted to dig and unblock it

    If you are in an area where the ducting is relatively new it is a very quick way to deploy fibre and largely avoid road closures and digging up footpaths

  14. anon says:

    How do I see if im in a FTTP or Hybrid area for virgin media? is there a way

    1. Anon says:

      Makes no difference either way. Still same services and prices.

    2. John says:

      If it was built in the last couple years it’s more than likely FTTP.
      If it was deployed more than a few years ago it’s more than likely HFC.

      The odd exception to that is where they have infilled some streets in existing HFC areas and that work may also be HFC.

      Any deployments in the last couple years that cover a large area have been FTTP.

      They are both functionally identical at the moment with identical packages in either area. The FTTP is simply DOCSIS over fibre using RFOG (radio frequency over glass).

  15. Stephen Jordan says:

    It’s like the wild west at the moment the government need to assign Areas,to network operators and standardise the kit so that the same street isn’t getting dug up 3 or 4 times by different providers,and open the networks up to all, it would save a fortune in build costs

  16. Jason says:

    Does that mean they will expand their current build area as well? I wonder if they’d expand into our street… All the surrounding streets are 1gig capable… Mine doesn’t have virgin at all

    1. Duncan says:

      Probably not but who knows with VM. They don’t have a clue if you ask them directly most of the time.

      This seems to be for entirely new areas with no presence currently according to the article.

  17. Matthew says:

    Iv it’s not till 2028 why care just go to bt full fiber

  18. Matthew says:

    Must be nice liveing in these new areas of vm

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