Virgin Media O2 UK Could Bid GBP100m for Full Fibre ISP Trooli
The parents of broadband, mobile and TV provider Virgin Media (VMO2) are allegedly exploring the possibility of a £100m bid to takeover Kent-based ISP Trooli, which is aims to deploy a gigabit-speed full fibre (FTTP) network to 1 million UK premises by the end of 2024 (in August 2022 they reported 275,000 completed).
The operator was originally supported by an investment of €30m from the Connecting Europe Broadband Fund (Cube Infrastructure Managers) and £5m from NatWest. But this was given a huge boost in 2021 by a new £67.5m debt facility agreement via a consortium of commercial lenders, facilitated by the CEBF (here).
As part of their rollout, Trooli has been busy building their new Fibre-to-the-Premises (FTTP) broadband network to serve a sizeable number of towns and villages in Derbyshire, Kent, East Sussex, Berkshire, Buckinghamshire, Cambridgeshire, Hampshire and Suffolk. The initial goal had been to reach 400,000 premises across around 300 towns and villages by Dec 2022, but it’s unclear whether that was achieved.
But as we reported earlier this month (here), Trooli will need more investment to continue their rollout and there have recently been question marks over the level of take-up by consumers and appetite of investors to feed that plan. As a result, the provider has recently become the subject of intense speculation around the possibility of an equity sale or takeover by a rival provider.
According to Sky News today, a “substantial number of parties” are now said to be examining offers for Trooli as part of a “formal auction process“, which is still reportedly being handled by bankers at Lazard. One of those parties has been named as Virgin Media O2 (or parents Liberty Global and Telefonica), although it could merely be more of a curiosity approach.
ISPreview.co.uk queried the recent speculation with Trooli last month and a spokesperson confirmed they were in “various exciting conversations about our future growth“, before adding that such talks were naturally confidential. But we were also told that they are planning to share more about their growth plans for 2023 and beyond “in the near future“.
At this point it’s worth noting that Virgin Media is currently in the process of completing their long-running Project Lighting broadband network expansion, which has pushed their coverage – via a mix of FTTP and Hybrid Fibre Coax (HFC) technologies – up to 16 million UK premises.
However, VMO2 is also in the process of establishing a new joint venture (Nexfibre), which aims to build a wholesale focused full fibre (FTTP / XGS-PON) broadband network to cover “up to” 7 million additional UK homes (here) – staring with 5 million by 2026 (i.e. those homes not currently served by VMO2). Trooli’s network might conceivably be a good fit for this because the provider has, thus far, largely avoided overbuilding VMO2.
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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And then start downgrade current customers FTTP to DOCSIS to make it compatible with the rest of their archaic network 😉
and after this year’s 13.8% price increase, charge RPI + 3.9% every year with offshore “support”
Er, the whole of VM’s broadband uses DOCSIS regardless of whether it’s HFC or FTTP, and the plan is to migrate it all to XGS-PON.
This should be blocked.
They only want to buy to prevent competition, simple as. I’m expecting other buyers like another bigger ALTNET hopefully. People want to get away from VM’s inflated pricing model and operating practices….
I doubt there are any grounds to block such a deal, if it were to occur. Trooli is a fairly small cog in a much bigger market, and we’d be talking about the new joint venture, not VMO2, so the CMA has no real need or reason to take a closer look.
And that’s how they get round competition scrutiny. Original comment still stands though, it’s to block any form of competition. People are fed up with two dinosaur companies BT and VM.
The first is slow to innovate and doesn’t like investing any profit, the second just rips people off with high prices and bad customer service/operating procedures. That’s my opinion having used both. ALTNETs were like a breath of fresh air, coming along cheaper “just internet and phone” services and symmetric and many capable of 10gbps (i.e. a modern network not constrained at the get-go like BT’s GPON)
They get around competition scrutiny by acquiring a company that isn’t a current competitor.
Genius.
How exactly do you think larger companies generally expand into non-core markets?
First of many VMO2 will acquire. They’ll be the ones hoovering up either failing or teetering altnets. Absolutely no way their coverage plans will be reached otherwise.
As long as they wholesale who cares?
If people are “fed up with two dinosaur companies” then they should give their custom to the plucky upstart when the service arrives in their area. Unfortunately it seems like people are buying the cheapest broadband they can get hold of and their desire for this outweighs any negative opinions they might hold of BT and Virgin.
“people buying the cheapest broadband” – well that wouldn’t be BT or Virgin for for ALTNETS other then Trooli then.
I’ll be one of those dumping VM and their ridiculous price increases year after year in favour of a symmetric service that’s cheaper and much less latency.
A plucky upstart wired up my neighbourhood. I would have signed up with them but their timing was off, so I ended up recontracting. Also, they want a 24 month contract, and they don’t offer a bundle with phone like. End result, no custom from me just yet.
I am fully aware of the possibility of going to VOIP with my line, and I would be happy if they provided a bundle that took care of that for me. I want the convenience of the bundle. Don’t ask me why I need a landline.
These are some of the reasons why these plucky upstarts may struggle to get uptake — at least as it applies to me.
I live in a trooli area. They basically followed Openreach around, doing their own FTTP months after OR did (using PIA, so OR probably cleared the ducts and made it easy for them!)
Unsure how the “dinosaur” is offering a worse service here – they have real ISP choice. I can’t get either service as it’s a flat but if I could I’d be on Openreach, and it seems that is what the house-occupying neighbours are doing judging by the presence of new OR boxes and cabling and not really much from Trooli, ditto any SSIDs I can see.
A VMO2 purchase would probably neatly fit in though, as VM are in the nearby town but literally stopped their rollout at the welcome sign.
Trooli failed because their pricing simply wasn’t competitive against other players, unlike most ALTNETS.
Or it’s build programme and homes passed programme could not be converted into homes connected
You can pass x premises but if you don’t have workable solutions for direct in ground mdus or joint user poles and your a rural builder then you are missing a huge amount of premises before you start
Trooli pricing was based on punters paying a premium for faster speeds. This would give a return on investment. Unfortunately punters didn’t want to pay a premium and now Openreach and other altnets with far deeper pockets and cheaper prices are all over their area overbuilding them.
Virgin don’t have much overlap with Trooli so it is down to the bean counters to value the network and debts against Virgin PIAing themselves.
‘You can pass x premises but if you don’t have workable solutions for direct in ground mdus or joint user poles and your a rural builder then you are missing a huge amount of premises before you start’
Why spend the extra serving such premises? Just ignore them and keep the cost per premises passed low. As long as the sunk costs of getting the fibre there to begin with are spread between enough premises no need to touch DiG or awkward shared poles with a bargepole.
Incumbent on planners to look at the Openreach plans and do the maths. Ignoring the difficult premises should go without saying and they should be excluded from the sums when spreading out the transport network costs.
Cherry picking? Definitely. However when it doesn’t lead to financial distress who cares?
The simple plan for those hard to reach areas is to pretend they don’t exist, much as Openreach and everyone else using PIA tend to. Deal with them at the end if the budget per premises passed is there.
Exactly why. If someone who does not WFH nor games has a crappy low speed ISP on BT they are likely to keep that rather than pay more
Competition does not mean just speed, it also means price. Without the price then the value is not there for a lot of people
Amazing how a company has so much officially declared debt (VM) and doesn’t make profit, can find so much money to even think about bidding for it.
VMO2’s Joint Venture partner, with 50% of the holdings, is InfraVia Capital Partners.
Tax avoidance basically
VMO2 is a joint venture between Telefonica and Liberty Global.
It runs into trouble mummy and daddy have big wallets.
Good point, Mark. Not only is VMO2 owned by big wallet parents but has a business unit that is a joint venture with InfraVia Capital Partners.
That might well be the business unit looking at buying Trooli and will potentially end up owning much of the VMO2 Lightning RFoG build.
This is one of the things that put me off Alt nets, they could be taken over by anyone, including TalkTalk.
Your obsession with TalkTalk is a little strange.
They aren’t going to buy any fibre infrastructure. They don’t want it: they built some of their own and rapidly sold it.
TalkTalk are partnering with tons of full fibre infrastructure providers: they have absolutely no interest in owning such infrastructure themselves.
You worry but it seems like TalkTalk has taken over your mind, they’re living there rent free, TalkTalk are just a company let them go and get over it
No-one seriously thought VMO2 were planning on building their way to their coverage target, did they?
It begins.
They weren’t satisfied with somehow being legally able to buy all the cable cos in the UK, and a mobile co, now they want to buy up the FTTP altnets. Ofcom, wakey wakey.
The cablecos that sold out to NTL and Telewest were only happy to do so after making little or no money. We are now better off for having just a single cable operator to compete with Openreach, BT et al.
The cable companies all served different areas as franchises were handed out. None of them competed so no reduction in competition when, through a series of transactions, they ended up as a single entity.
Prior to the merger VM were purely fixed line, O2 mobile. They didn’t compete to any meaningful extent.
I’m not sure what you’re expecting the competition authorities, regulator, etc to do or why you think they should’ve gotten involved in the evolution of VMO2?
Roger_Gooner.
Not quite correct. Wight Fibre on the Isle Of Wight is not Virgin Media.
It has successfully transitioned from HFC to XGS-PON and extending their coverage and cheaper then VM.
The result of merging into one Cable company for rest of UK is meaning an American Company that wants to charge through the roof (like it’s US cable companies). VM itself is just a licensed brand name on loan (and could disappear).
Great if it happens
Yeah, DOCSIS aka RFoG alive forever.
VM want RFoG gone due to limitations. Certainly won’t be acquiring GPON or XGSPON networks to spend money moving them to RFoG. VM already have customers on both GPON and XGSPON.
Until recently, new VM network extensions were RFoG so they could easily use TV360/TIVO v6 boxes for TV and existing HUBs. They have VM Stream working over IP now, so when cloud recording gets enabled that will take the TV hurdle away (assuming they still want to offer TV services in the future that is).
There is a lot of new network that is RFoG.
Said new network can have XGSPON delivered relatively easily and will – it runs on different wavelengths to RFoG.
RFoG was deployed because it was necessary at the time, or sometimes because the deployments were small infill with folks on a reverse node.
The new converged network infrastructure, one of the enablers of XGSPON, is getting there. Slowed down by availability of hardware but it’s getting there.
Longer term as PON and the converged network become a thing it won’t just be Openreach that’ll be vacating buildings.
Why can no one read the article or atleast do the basics and check facts before commenting. The network if acquired will be part of the JV which will be XGSPON not Docsis. VMO2 are also getting rid of Docsis on the entire network by upgrading there entire network too full fiber and moving too XGSPON.
What a funny user name, when you spread misinformation yourself by saying that “no one” realises that VM are going XGS-PON and the separate wholesale network joint venture.
I did for example. And it’s fibre not fiber too.
VM article comes out. People complain about VM the company, because they’ve experienced the poor service first hand. Then the shills come out of the woodwork: noooo reeeee VM the greatest thing ever, VM the future, VM .. yawn.
The fact that ANYONE would say wonderful things about VM means that
a) They’ve never used it
or
b) They’re employees.
or
c) They’re edgelords that just like to write the opposite of what anyone has a legit complaint about.
You lot are worse than Team Z taskforce.
It’s difficult to believe that VM would pay £100m, liberty their owner are notoriously tight when doing deals. It’s only worth £1 with the fact it’s got a lot of debt and no way to profitability. Why would they over pay – unless someone at Trooli has leaked a price to get an auction going???
If the 275k figure is about right and assuming no overlap with VM’s existing network and that £100m includes any debt taken on, that would be £364 per premises passed which is less than VM’s budget for project lighting.
Although Trooli used PIA so the valuation should be lower when there is a requirement to pay rent to Openreach indefinitely.
£100m does feel like a large round number someone made up to talk up any potential bids.
@kevin
Valuations like this are normally on a cash free debt free basis. They may well pay 100M or ~370 per prem passed. That actually might not be such an amazing price from troolis perspective. It basically means the original investors get a roughly 0% ROI.. not great. The creditor will at least get paid though.
Yeah it’s not the price investors might have expected and will chill investment for sure.
These guys may have looked at the prices paid for cable companies in the past, close to 4 figures per premises passed, and transposed them to networks that are largely PIA and are for sale because they can’t pay their debt repayments alongside their regular bills.
That isn’t happening in this environment. Some reality is being introduced to a market that was bubbling over. The altnets that looked after their costs, raised funds wisely and are generating the custom will survive, prosper and potentially demand a very high premium for acquisition or continue as independent entites, maybe even becoming acquirers, the others will either be purchased for these kinds of prices or simply go bankrupt.
If they have enough money laying around to make a bid like this they obviously dont need to increase mobile package by 17.3%, absolute money grabbing arses, ripping off the less well off to fund these kind of ridiculous deals
They’re in a panic. DocSIS 3.x isn’t going to cut it going forward and fairly soon. DocSIS 4 is too expensive in UK to implement and still has inherent latency issues though it’s better than previous. This is why they intend to go XGS-PON instead by 2028.
They are realising that BT (finally) and the ALTNETS are whipping around now so they’ll be on the look out for a number of ALTNETS to consume.
‘DocSIS 4 is too expensive in UK to implement and still has inherent latency issues though it’s better than previous.’
No, actually cheaper in the UK than anywhere else in the Liberty footprint, however close enough in price to a full fibre overlay that that was chosen. The UK is the only country in the Liberty Global footprint that’s fully ducted which brought the price of full fibre build down to where it was within 25% of 4.0. 4.0 doesn’t play well with RFoG, a workaround is needed, so may as well go XGSPON everywhere when you’re planning on having millions of full fibre premises anyway.
DoCSIS 4 doesn’t have ‘inherent latency issues’. It has latency comparable to GPON and XGSPON thanks to Proactive Grant Service Low Latency DoCSIS being a mandatory part of the standard.
https://www.cablelabs.com/technologies/low-latency-docsis
Has to be a good thing for customers if Trooli aren’t viable, and they’re taken over by an established company. Not so good if it is VM due to their high pricing and poor service, but better than Trooli going bust. As for investors….investors have lost their shirts on new competitive or unregulated infrastructure investments since the pyramids. Canal builders, the railway mania, Channel Tunnel, M6 Toll, are all good UK examples. Infrastructure is, in the majority of cases most efficiently served by a single provider, to do otherwise creates duplication and inefficiency. For decades now both Labour and Conservatives have clung religiously to the belief that competition creates more benefits than are lost through duplication (and in some cases triplication) of telecoms infrastructure. But since even Virgin Media’s cable assets have been unprofitable through decades when OR ADSL or VDSL were the only competition, that political belief can be seen to be the sort of nonsense only a politician could convince themselves of.
I couldn’t agree more with. The government should have built a new XGSPON network and let the ISPs use it. ISPs will compete on price, service and customer services. The government can introduce a small levy to fund hard to reach places along with a levy to pay for the network build. They could have allowed private investment by auctioning areas to build out according to spec. We would have had FTTP to >95% of the UK already.
Andrew, I’m of the same mind on everything you’ve stated above. Infrastructure investment is incredibly risky and when it comes to publicly traded stocks retail investors regularly get burned, look at Sirius Minerals as an example. The same applies to the Altnets, with their whole business model dependant on persuading customers to leave Openreach and VMO2.
One of the telling things, I read, is the comment that Altnets struggle to persuade prospective customers that they aren’t already on full fibre, when they’re on FTTC, but this may suggest that a large majority are happy with their current connection speed and don’t see the need to upgrade. Also, even though I don’t understand it myself, many appear to have a strong emotional attachment to their landlines and will likely hold onto them to the bitter end.
Here we go, the Ex-Telecom engineer BT fan. Its not the love of FTTC why people stay on those packages or because of no need for faster speeds. It’s often price, having to be in for a new installation hassle and lack of advertising that an ALTNET is in the area and lack of door flyers etc. Some Altnets do this but not all. It also takes time for word to go round that service is available and is OK as some people worry about support.
Trooli’s prices were simply not competitive compared to even TalkTalk/EE/Others and their coverage was patchy. They were not symmetric on residential either and that is usually a big competitive positive against the traditional BB players if the price is right too.
A number of ALTNETS don’t explain that a fixed IP address can get round CGNAT either leaving some folk resistant as they think CGNAT is all that is available which is no good for those that to get from internet to home stuff. Some don’t clearly state in their FAQs whether they support IPv6 either. A whole host of reasons that add up to less take up….
I agree with anonymous in that people stay with what they have, because they don’t need anything faster, nothing to do with any love of FTTC. I don’t love FTTC it is a way of getting a broadband service to me, and it does the job. Also anonymous is correct about installation hassle, certainly for people who work 5 days a week and in the daytime. I work 4 days a week, and I really don’t want to spend one of my days off hanging around for someone to put fibre in when I have no real need for it. Wednesdays I go out, they will not install on sundays, so the only day is a Thursday and I like to relax on that day or may go for a walk if it is nice
I just had a look at Trooli’s site and I see what anonymous means about their prices, they have lowered them a bit now, but still pricey, and it seems like they offer nothing lower than 300Mb/s and the service is asymmetrical, so may as well go for an Openreach based provider.
anonymous saying about static IP, not all providers supply them and those that do charge far too much for them, Zzoomm charges £10 a month for them, far too much. As for IPv6, most people would have no idea what it is and don’t care. My new TPO-link router can use Dynamic DNS and my NAs can be accessed from other places as well if I wanted to, not that I have much need these days.
I have not really looked what restrictions CGNAT has, not sure if Zzoomm uses CGNAT, again most people will not care uinless they have a business.
I do agree with Ex Telecom Engineer that a lot of people on FTTC think they are already on fibre, talking to someone at work last week who was complaining about the mess Zzoomm have been making around the city and saying they are already on fibre. Thought maybe there were on Openreach fibre but after getting some more info, they are on FTTC. Took a while to explain the difference.
Look at the churn numbers for ISPs. 10-15% of people change supplier each year. After a little fanfare and a burst at the start the move to an altnet follows this pattern.
Was the same story with Virgin Media’s Project Lightning build, same story with CityFibre where they’ve had network live for a while and will be the same here.
If anyone running an altnet expected it to be different if they were entering an area that had FTTC/P already they are swiftly learning they’re mistaken. Keeping build cost down is very important.
“this may suggest that a large majority are happy with their current connection speed and don’t see the need to upgrade. Also, even though I don’t understand it myself, many appear to have a strong emotional attachment to their landlines” => I don’t really agree with this. I think most people are OK with their current connection speed but they would go for more if they could afford it. I don’t think there is any emotional attachment to their landlines. In most cases it’s just that people are change and risk averse. They don’t like BT or VM but they kinda work OK for most people and they think it could be worst with an unknown ISP. The hassle of a new internet installation, new wifi, etc is enough to put a lot of people off. Just look at how many mobile customers don’t jump to SIM only plans at the end of their contract to buy a phone and continue to over pay for months.
Trooli’s strategy was really flawed as already been mentioned. Trying to sell fast plans at high prices in low density areas was a brain dead idea.
‘Trooli’s strategy was really flawed as already been mentioned. Trying to sell fast plans at high prices in low density areas was a brain dead idea.’
Don’t think they had much choice. The flaw was their building in those low density areas in the first place. The pricing had to be high in the hope they could sign people up and recoup the build cost as quickly as possible.
@GreenLantern22, You say about people affording Fibre, to some extent that is true, a higher speed fibre connection costs more and some people just don’t have the money to go for fibre. There are also some people like myself who can afford it, but look at what are they getting for that extra money that is really going to make a difference in their lives.
It is possible to get FTTP for the same price as FTTC, but normally is the same speed, so no real push to get FTTP, some providers don’t even so the lower speeds of FTTP, but they do seem to be getting better.
What puts a lot of people off apart from the hassle of having it installed is the 24 months contract that seems to be the norm for FTTP. A lot of people don’t want to be locked into a 24 month contract, some don’t even like 18 months. Need to change, I will not enter into a 24-month contract.