Virgin Media O2 Close to Selling UK Masts Stake to GLIL Infrastructure

Virgin Media and O2 have reportedly entered “exclusive talks” that could see them selling off a big stake in the UK’s largest mobile tower network to GLIL Infrastructure. The deal is said to value this part of their business at around £2.5bn, with any proceeds helping to fund their full fibre (FTTP) broadband and 5G mobile roll out.

At present the parents of Virgin Media (Liberty Global) and O2 (Telefonica) hold a 50% stake in mast operator Cornerstone, which forms part of a network sharing agreement with rival Vodafone (Vantage Towers). But in April 2023 it was reported (here) that VMO2 had begun a process that could sell “at least” half of their stake in this business (at the time this was said to be worth c.£750m), with Goldman Sachs and JPMorgan being appointed to oversee the process.

In recent years’ it’s become increasingly common to see mobile operators selling off tower assets, or stakes in those same assets, to help fund infrastructure and service upgrades elsewhere. In the case of VMO2, the operator has a number of expensive projects to both deploy 5G mobile, and upgrade their old Hybrid Fibre Coax (HFC) based fixed broadband network to 10Gbps capable FTTP (XGS-PON) by 2028 (Project Mustang).

On top of that, VMO2’s parents have created a new joint venture called nexfibre (here) – backed by £4.5bn – that aims to deploy an open access full fibre network to reach “up to” 7 million UK homes in areas NOT currently served by Virgin Media’s own network – starting with 5 million by 2026. Virgin Media is currently the only ISP on this network (here).

Alternatively, VMO2 / nexfibre could use the extra funds to help support a potential takeover of more alternative full fibre networks, much as they recently did with Upp (here). Clearly, VMO2’s parents are considering a lot of different approaches for the future right now, and selling a stake in their tower estate is a natural part of that process.

At present it’s not known how much of a stake GLIL, a partnership of British pension funds, will actually look to secure (it’s likely to be around 25% or 50%). But Reuters suggests we may well find out soon, as VMO2 are due to release their next batch of financial results tomorrow, although that may well occur before a deal can be formally announced.