Neos and Virgin Media to Bid on British Rail’s Trackside Cables

Two investment groups – one including Neos Networks (bidding alongside Cellnex) and the other Virgin Media (bidding alongside Nokia and Jacobs) – have reportedly been approved to bid on the £1bn auction of 10,000 miles worth of Network Rail‘s trackside cable network. The winner could use this to improve gigabit broadband and 5G cover.

The privatisation plan, which will most likely see the winning bidder being expected to upgrade the trackside infrastructure and build 250 new mobile masts to help tackle 5G “notspots” for commuters, was first revealed by Network Rail a year ago (here). The sale itself reflects their older trackside cable network (much of this still runs off legacy copper lines and is in need of an upgrade).

At present the operator’s trackside data infrastructure (a mix of copper and some fibre optic cables) carries all sorts of transport, video (CCTV etc.), signalling and other communications. Over the past decade we’ve seen Network Rail repeatedly try to make better use of this ageing infrastructure (e.g. offering greater access via wholesale), not least in order to help them cut their massive debt pile.

However, Network Rail, which has struggled to find an alternative solution for the aforementioned trackside cables and associated infrastructure, ended up putting it up for auction – although the organisation will no doubt retain some access (essential for maintaining their services). According to The Telegraph‘s (paywall) sources, the two rival investment groups proceeding to bid will be supported by Neos Networks and Virgin Media (VMO2).

Is it worth £1bn?

The big question mark over all this is whether the infrastructure, considering the need for costly upgrades, is worth the forecasted asking price. The rail network tends to follow a very specific path and largely passes through areas that are already well served by a variety of other broadband and communications providers. Certainly, there will be opportunities to be found, but are they big enough to equate to £1bn? Time will tell.

Nevertheless, such a sale could help to support the Government’s £5bn Project Gigabit broadband rollout (nationwide gigabit coverage by around 2030) and the wider industry-led £1bn Shared Rural Network (SRN) project, which aims to extend UK geographic 4G mobile coverage to 95% by the end of 2025. Not to mention the commercial rollout of 5G networks.

Lest we forget that, back in December 2017, the UK Government pledged to make “uninterrupted” WiFi and Mobile (5G) broadband speeds of up to 1Gbps (Gigabits per second) available on-board all UK mainline train routes by 2025. But achieving that on time – without significant upgrades along the route – would be very difficult. It’s perhaps no surprise that we haven’t heard the Government talking about this target for a very.. long time (here).