Virgin Media O2 and Nexfibre Build FTTP to 300,000 Extra UK Premises UPDATE
Broadband ISP and mobile giant VMO2 (Virgin Media and O2) has today published their Q4 2023 results, which suggests that their full fibre (FTTP) coverage via nexfibre has grown to add another c.299,000 premises (up from 251k in Q3) and Virgin’s fixed broadband base slowed its growth to 5,717,600 (up by 9.5k in Q4 vs 40.8k in Q3).
The latest results reflect somewhat of an annual report and for some reason VMO2 has opted not to include a specific figure for quarterly network build. But they did say that their fixed line network added a total of 833,000 premises during 2023, and we’ve been able to infer from this that Q4’s build pace added c.299,000 premises (the vast majority via nexfibre).
Once again, nexfibre’s roll-out pace has increased, although it should be noted that the Q4 results don’t yet appear to have been boosted by last year’s acquisition of Upp’s full fibre network and customer base – here (i.e. an extra 175,000 premises passed and 4,000 customers). Integration work on this front is still ongoing, so we may have to wait for the next Q1 2024 results to see the figures combined.
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Just to recap. Nexfibre 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. But Virgin Media, which shares some of the same parents, is currently the only ISP on this network (here).
At the same time, Virgin Media are also deep into the process of upgrading their older Hybrid Fibre Coax (HFC / DOCSIS 3.1) and Radio Frequency over Glass (RFoG) FTTP network – covering over 16 million premises – to harness the same XGS-PON based FTTP technology as nexfibre. But this isn’t due to complete until 2028.
The key thing here is that VMO2’s total fixed broadband network reach can thus be considered a combination of both its own coverage and that of nexfibre. In theory, this could push the combined VMO2 and nexfibre footprint to nearly 80% of the UK by 2028 (23 million premises). The combined VMO2 + nexfibre network currently reaches 16,999,700 million Homes Serviceable (up from 16.7m in Q3).
Nexfibre Rollout Progress
Q4 2023 = c.299,000 Premises
Q3 2023 = 250,800 Premises
Q2 2023 = 175,500 Premises
Q1 2023 = 107,800 Premises
Q4 2022 = 24,000 PremisesNOTE: Some 4 million VMO2 and nexfibre premises are now covered by FTTP (XGS-PON and RFOG). But a tiny portion of the above figures include a small bit of infill build for Virgin Media itself (separate to nexfibre).
The operator’s mobile base has also grown during Q4, although sadly Virgin Media has stopped giving any solid figures for their Pay TV (video) base (we suspect it may be in decline).
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Quarterly UK Customer (Connection) Figures – Q4 2023
5,717,600 Fixed Broadband – (up from 5,708,100 in Q3)
44,861,200 Mobile inc. Wholesale – (up from 44,605,200)
The operator (O2) has also confirmed that their 5G mobile network has grown its UK outdoor population coverage to 50%, which was achieved on time, albeit much later than many of their competitors (EE and Three UK hit this all the way back in 2022). But they’ve yet to set a clear target for their future roll-out.
On the financial front, VMO2 reported total transaction adjusted revenue of £2,830.7m in Q4 2023, which is up from £2,769.1m last quarter.
Lutz Schüler, CEO of Virgin Media O2, said:
“We ended the year with stable revenues in line with our revised guidance at Q3, and achieved the low end of our mid-single-digit Transaction Adjusted EBITDA growth guidance through accelerated synergy execution which offset the impacts of consumer spend optimisation.
Operationally, we invested another £2 billion in our networks and services, with 2023 being the fastest year of fibre rollout as our fibre footprint reached over 4 million premises. In aggregate, our fully gigabit serviceable footprint now reaches over half of all UK homes, and our 5G network covers half the UK population. We also continued trading momentum with mobile and fixed customer growth, supported by sustained customer-first initiatives like inclusive EU roaming and our O2 Priority loyalty scheme.
Looking ahead, the 2024 outlook will be impacted by incremental investment in key initiatives to drive future growth, including increased marketing across our rapidly expanding fixed footprint, new commercial initiatives and wider digital and IT efficiency programmes. We remain focused on delivering against our core strategy and these key investments will help us to lay down strong foundations for future success.”
In addition, it’s noted that the average broadband speed on Virgin Media’s network during Q4 was now 358Mbps, which is a year-on-year increase of 19% and will no doubt be boosted further by last week’s launch of their 2Gbps broadband package. Some 1.9 million customers also take one of their converged fixed broadband and mobile Volt bundles.
Finally, VMO2 said they invested more than £2bn into their fixed and mobile networks during 2023 (+£5m per day) and the operator is targeting the addition of approximately 2 million FTTP homes in 2024, with nexfibre planning to invest £1 billion over the year.
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UPDATE 11:48am
One interesting change today that might have gone unnoticed is the adjustment to VMO2’s pricing policy. The policy now states, for new customers, that the “monthly price shown will increase each April from April 2025 by the Retail Price Index rate of inflation announced in February each year plus 3.9%.”
In short, this means that new customers who join today won’t be impacted by an annual price increase until April next year, which is an improvement as previously even new customers would have been hit by the annual hikes in April 2024 (i.e. if they joined between the Feb-March period).
Some readers may note that the RPI increase clashes with Ofcom’s future policy banning both inflation AND percentage linked price rises. But it’s crucial to recognise that the regulator hasn’t yet issued their final statement on that policy and, in any case, once enacted the changes would only relate to new or re-contracting terms.
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, BlueSky, Threads.net and Linkedin.
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VM need to pull their finger out on their fibre build. While visiting friends in Swansea at the weekend (where their HFC network has been for years) I was amazed to see how much take up of Openreaches FTTP network there was. VM appear to falling behind quite drastically.
My brother’s street in Swansea has been enabled for open reach fttp since Christmas. I’m telling him to change as virgin will be charging him £61 per month post the 8.8% increase for 264mbps. Rip off.
@Rob keep pushing him. I got Vodafone 900Mbps service for £36pm. The upload is quoted as 105Mbps but I’m often getting 125Mbps upload.
Can’t fault the service so far, nor the Openreach installation. Absolutely no qualms about running the cable from the CBT to where I wanted them to connect both externally and internally.
Vodafone router on the non-Pro package is mediocre, but you can pay an extra £10pm for a WiFi 6E router. I didn’t bother as I intended to add my own and use as an access point, thus keeping access to digital voice / VOIP, whilst also having ethernet connections to both my work and personal PC.
As much as the wording about annual price increases is odd, even if they did exactly as the contract says they’d still be price competitive with other providers.
@RightSaidFred Yes this is the year of pushing my brother to sort stuff out 😉 I think its good to have the option of switching between providers as it will help to keep prices down (maybe). So I’m thinking he should be able to cope with 300Mbps for ~£30 a month so currently looking at Plusnet. Cost here is the concern and I was trying to get him to go 5G but the Three and Vodafone signals aren’t great and then looking at O2 or EE then you’re in the fixed line price band.
Of course Virgin might do him a good deal as others have said they are getting currently. However I cancelled my Virgin on Jan 6th and its just been disconnected last week. I only got one automated email to say they had been trying to contact me (they hadn’t) to discuss a deal and I should ring them. I didn’t as they are a nightmare to contact and I didn’t have time. Oh well, their loss. I do wonder if they know what they are competing against for each address, as in Virgin don’t have much competition where I am so if they knew that then they don’t have to offer me a great deal. I moved to three 5g which is fine for what I’m doing now inc WFH so will see how this goes and come back as a new customer to Virgin or wait for fttp via openreach or toob to come along.
The thing with Virgin is that customers are getting wise to their pricing policies in regards to end of contract price hikes.
In years past Virgin always had the edge on speed since often the only alternative was FTTC. Customers who needed the speed had little option but to either pay or threaten to leave to improve their pricing.
Certainly hearing stories nowadays that customers threatening to cancel are being given retention offers of Gig1 for £16/month for 18 months. That’s only happening as the playing field is getting more competitive. I suspect that if it wasn’t for Nexfibre building in areas where only FTTC is available, VM would be posting a significant decline in customer base.
Not surprised by these build rates. My town had no VM presence (and only sporadic altnet builds) and then NexFibre appeared on one.network in October. They’ve almost covered the entire town in that time (all microducts). It took them 2 days to do my street. Giganet have taken 2 weeks on the same street and still not finished. Saying that still waiting for go live but it can’t be far away (Good bye long line FTTC!).
Virgin have passed millions of extra premises with Lightning and Nexfibre yet their fixed line customer numbers are pretty static. This suggests they are suffering poor takeup in new build areas or bleeding lots of customers in existing areas.
That’s quite correct, and has been the case for almost a decade. The VM broadband customer base remains much the same as in 2016/17, even as they have added vast numbers of serviceable properties. Whilst for an altnet there’s always a slow ramp up for new build, because VM have been building out since forever that argument doesn’t hold (you might see slow take up on latest VM new build, but there should be continuing takeup on previous year’s build outs). In these latest figures, the rough balance is 833k newly serviceable properties for the full year, and 64k net new customers. Go back and we see similar ratios in previous years. For whatever reason, it is clear that they are seeing a net loss of customers across the existing customer base, and mostly keeping pace with that attrition only through expensive new build*. At the ratios we’re seeing, that involves a huge amount of capital for little return, falling penetration across their total network, higher capital intensity, and lower return on capital employed.
On top of that, despite their userous price rises for customers already in contract, VM’s average revenue per fixed line customer continues to be poor – £46.81 at the end of 2023, and whilst that’s only down 1% on year end 2022, that doesn’t take account of inflation of 10.1% across the year, so effectively VM’s ARPU fell by 11% in real terms. VMO2 continue the intentional non-transparency of Liberty Global, so it’s difficult to see how the business really is performing – but making vast investments whilst your customer base and ARPU stagnates seems very strange. Buried in their latest earnings announcement you’ll find at the top of p7 the fact that VMO2 made a loss of £3.6 billion. Yet that is unmentioned in the breathless waffle that fronts up the announcement. I’d have thought investors might actually regard a net loss of that size to be rather important, and more important than all the smoke and mirrors “adjusted EBITDA” nonsense that they keep on using.
You have to hope none of your pension is invested in VMO2!
* Yeah, I acknowledge it’s a more complex picture, at aggregate level my argument still holds.
“Virgin Media are also deep into the process of upgrading their older Hybrid Fibre Coax (HFC / DOCSIS 3.1) and Radio Frequency over Glass (RFoG) FTTP network – covering over 16 million premises – to harness the same XGS-PON based FTTP technology as nexfibre.”
I hadn’t heard of them doing this yet? How does that work? Do they have to go into each house and change equipment? Or just change it when an upgrade is ordered?
Also I noticed nexfibre have locations on their rollout that are already covered by Virgin media. For example Loughborough. How does that work?
haha at the time, I said whats the point of doing RFoG.
I was instantly seethed at by all the resident I know everything types on this site.
A handful of years later, and VM are doing exactly what I said they would and dropping RFoG and HFC. Meanwhile, the chud “experts” from ISPR continue along professing to be the oracle of truth but in reality knowing nothing at all and just spouting opinions as if it were fact. Man this site does tend to attract a lot of these armchair network engineers. They watch a few youtube videos and install PFSense and all of a sudden they’re qualified network engineer.
“I hadn’t heard of them doing this yet? How does that work? Do they have to go into each house and change equipment? Or just change it when an upgrade is ordered?”
Judging by what VM told investors when the started the XGS PON project, the upgrade from HFC is only to the cabinet in the first instance, and then the droplinks to each property will be replaced only as and when the customer orders a service that needs FTTP. That avoids the huge cost (guessing £1-2bn) of replacing them for all properties with a droplink in place. For the time being might as well leave alone for customers taking a service well within the capabilities of DOCSIS HFC. At some point that will have to change, but it could be a decade before it makes sense to replace droplinks for customers who won’t be taking a more expensive service.
If you have an existing HFC connection and XGS-PON becomes available, then when you order a service requiring it, they’ll have to pull a new fibre optic from the cabinet to your property, replace the existing cable and terminations, and give you an ONT requiring a mains power connection (as you do with Openreach FTTP) and a new hub, currently a Hub 5x. In many cases they’ll need to find a new route to bring the optical cable across from the pavement, because the overwhelming majority of HFC installs use directly buried coax, so unlike most OR connections there’s no duct in place.
Things may be different in the experimental upgrade areas like Salisbury and Stoke, and new build Nexfibre will be standard XGS-PON but all new customers. Note that there’s been chatter suggests some of the XGS-PON conversion work is being done for VM by Nexfibre, those assets will be separate to the Nexfibre owned new build areas.
Not on the rollout for Openreach
Not on the rollout for ANY altnet
No 5G.
Do I live in the countryside? no. A town with over 100,000 residents.
Virgin Media FTTP is a golden unicorn from another dimension.
The way i see it is why would you want VM if other FTTP suppliers are available? VM have not got a good record for customer service as has especially recently been commonplace in the media. Something like a BT FTTP 900 is a far more attractive option instead of VM.
I’m an ex-VM customer who won’t ever be going back, but I’d point out that there’s still only partial overlap between VM and other FTTP options, added to which some people actively want the couch-potato TV bundles the company promote.
Regarding VM’s customer service, it is indeed as dreadful as its reputation, however evidence is clear that people place more importance on price and glitzy marketing than they do on customer service when choosing a service provider.
Given that Virgin are growing their network by c.300k homes a quarter, but have only added 9.5k customers, implies that they have significant underlying churn.
The next year will be very interesting. Certainly not good for investors!