Liberty Global Boss Claims UK Gov Wants it to Rescue Broadband Altnets
The boss of Liberty Global (Mike Fries), one of the parents behind UK broadband provider Virgin Media (O2) and associated network builder nexfibre, has reportedly claimed that the UK Government’s Business Secretary, Jonathan Reynolds MP, expressed that he was “anxious” for them to step in and rescue struggling alternative networks.
The past couple of years have been more than a little bumpy for the market’s many altnets. On the one hand, they’ve continued to drive positive competitive change and have built full fibre (FTTP) broadband lines to millions more premises – Summary of UK Full Fibre Builds. Many consumers are thus already able to enjoy the benefits, which is often reflected by faster speeds and lower prices.
According to INCA’s most recent report (here), full fibre broadband coverage delivered by altnets grew by 27% in 2024 to reach 16.4 million UK premises (or 15.2m if you exclude overbuild between the altnets) and could grow to 18.6m in 2025. But that growth rate of 27% also represented a slowdown from the 57% reported in 2023. This is because many altnets have also had to slow their deployments and make redundancies, while at the same time re-focusing toward efforts to grow customer take-up.
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The above situation has been fuelled by a combination of factors, such as rising build costs, competition from rivals (e.g. overbuild, price discounts), the challenge of generating a viable level of take-up and the difficulty of securing fresh investment while interest rates remain stubbornly high. As a result, we’ve already seen a fair bit of consolidation in the market and plenty of job losses from various network operators.
On top of that, there’s also been some related disruption to the Government’s own Project Gigabit contracts (examples here, here and here) and yesterday’s 2025 Spending Review saw their target for delivering 99% UK coverage of gigabit-capable broadband being put back from 2030 to 2032. Suffice to say that the strains of this market are already well understood.
According to a new FT (paywall) piece today, the CEO of Liberty Global, Mike Fries, has now insinuated that the Government’s Secretary of State for Business and Trade, Jonathan Reynolds, is “anxious” for large network operators to acquired (merge) the UK’s struggling altnet broadband providers before they could collapse.
Both CityFibre and Liberty Global/VMO2 have previously already signalled a strong desire to consolidate (here and here), with others like Netomnia also considering expansion via further consolidation, so this is not a new prospect. But the idea that the Government may also be nudging them to do this does put a different spin on things.
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Mike Fries told an industry conference on Tuesday:
“I was on the phone with Jonny Reynolds … the other day and he gets it: It’s not a good moment for the UK right now if fibre customers lose service and fibre investors lose money. They’re anxious to see us and others [get] involved here, you know, and we will.”
However, an aide to Reynolds said there was no record of any such comments being made, with the aide adding: “No one at the meeting remembers him [Reynolds] saying this. It seems that something might have been inferred from Johnny’s warm tone, but this is a commercial decision for [Liberty Global], not for us.”
In fairness, Liberty Global and Virgin Media do have some history when it comes to criticising or using robust language against altnets (example), so it’s perhaps not surprising that Fries may be keen to talk down their opponents in the sector again.
On Tuesday Fries similarly claimed that many many “desperate” altnets had dropped prices as a “last gasp” to survive and that, ultimately, they didn’t have the scale required. The latter point may be true for some players, but scale alone is not a guarantee of sucess either. As for low pricing, that has been a common factor for many years to help boost take-up vs established players and we haven’t seen this change much over the past year.
At the same time it’s worth noting that VM/nexfibre’s position is currently struggling with its own set of problems after joint venture partner Telefonica launched a strategic review, which has already impacted the operator’s ongoing deployment of FTTP broadband lines via nexfibre (here). Virgin Media has separately had some difficulty with losing customers from their broadband base – recent price hikes didn’t help (here) – and their plans for opening up Virgin’s existing network to wholesale via a new company (NetCo) have recently been paused.
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Speaking of those NetCo plans, on Tuesday Fries said that the timing of Telefonica’s review was “highly unfortunate” and “not a well thought out position”. Fries added that the two sides would have to make a decision on whether to continue in the Joint Venture or “do something different” within the next 24 months, which in this fast-paced market is a worryingly long window of time to lose before arriving at a decision.
The truth is that the whole market, including VM/nexfibre, is currently under plenty of strain and almost everybody is busy adjusting strategies around that.
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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Fries’ comments strike me of those of a business trying to lobby to protect its position. Declining customer base vs. a growing RFS number. Below inflation ARPU growth. A pair of JV partners who can’t agree on strategic direction.
Seems to me that VM / LG are suffering some of the same challenges, if not worse ones than the Altnets they call out as struggling. While modest in a lot of cases, the bigger Altnets in the market are seeing customer growth, clearly taking those from VM given the declining base.
I’m not so sure. I think this is more aimed at the other half of the joint venture.
They’ve scaled back rollout plans to do a review. VM want to expand and the take away from this fighting talk is “we’ll expand by buying altnets”. It sounds to me like it’s more of an ultimatum for TEF. “We will step in”
Wouldn’t surprise me if Liebour want to make it more expensive for everyone. They’ve done their best since being in government, more than the Conservatives (although some is attributable from them too).
The best thing is everyone who can leave Vermin Media, do so, and support a local ALTNET instead.
The two dinosaurs, BT and Vermin, are desperate to remain on the gravy train and continue bad service (that I have actually experienced with BOTH) whilst taking any and every opportunity to milk customers and roll out the same line as to why every year about investment….
My parents will soon be signing up with an altnet, but not through choice, rather because it is the only FTTP option presently available (subsidised project gigabit). Openreach FTTP is literally within spitting distance but the government, in its infinite wisdom, decided to give the job to someone else.
Said altnet comes with a number of downgrades from their existing BT connection, but I thought I’d ask – should they still support an altnet even when it does not offer symmetric service? It would appear they’ve gone for the project gigabit minimum of 200Mbps up.
Openreach still has the area in its commercial build plans so I suppose the altnet will do as a stop gap until a quality provider arrives.
I’m not sure that is the case.
The government and the various regulators will be concerned about customers – including those with special needs – potentially losing all service if a provider goes out of business without some sort of provision for continuity of service.
Unfortunately, the Minister, who has no business experience, will have no option other (given the state of the government’s finances) than to press the larger players to step in, but is overlooking all the considerations around such a move.
@anonymous
Supporting altnet is a wonderful virtue, if only one can do it. No altnet available for me, only VM or OR. Many will be in a similar position.
BT Ivor, Not sure what Altnet they have that does not offer symmetric but even if they change to BT, its currently legacy GPON product and not symmetric.
I hear to tick a box to say they have offered something, BT/Brokenreach will offer a tiered symmetric service at some point in the future on 1gbps or above packages, with these being very expensive pricing so that people only select the lowest upload tier BUT the old box has been ticked and deemed a huge success.
Amazing to hear comments like this from management at Virgin Media who are bleeding customers to the “struggling” Altnets. As Mark says, things aren’t exactly looking brilliant at their camp either and without the NexFibre venture continually expanding footprint, VM will see their customer base shrink.
The jokers at Vermin Media, can’t even add modem mode to a Hub5x and want to dictate that you use their broken router (detail on their forum), whilst stalling ipv6 until past couple of years and only on NexFibre areas, and then it was broken and AFAIK, not even available now.
1gbps asymmetric speed on VM out of a contract is £78 and rising every year at £3 (current rate).
The comment is not about the AltNets but about back-channel intervention by a government minister.
It is right that the Business Secretary would be concerned that Altnets may fail. It would be bad for the industry, possibly worthless asset if overbuilt and may affect more widely the investment view of the UK. Basically we have made a mess of our UK infrastructure (water, energy, transport etc) and regardless of you views investment is needed.
However on this topic my view is that the Government should be concentrating in ensuring there is not a digital divide. That is both speed and in my view more importantly entry level cost. Yes there are schemes for those on benefits but the average cost of both fixed and mobile is rising above inflation particularly the entry products.
If the Altnets have over built themselves then that is in my view their fault.
If Alnets are the first FTTP provider in an area then that could be address by a USO obligated and available with proper funding to all FTTP providers. Increase the USO currently volunteered by BT to at least 50Mbs, do not allow get outs like mobile, increase its value to £9k, fund it properly using a percentage of the VAT revenue and Altnets to open access to BT,EE and Plusnet ISPs if they wished to.
It would require Ofcom to abandon their vision of at least two competitive wholesalers everywhere but I would hope this drive up the market share of an Altnet, encourage Altnets to complete coverage of their patches and possibly deter Openreach from overbuilding FTTP everywhere including areas already covered by BDUK.
What I wouldn’t want is VM in its current form and I don’t want the Government subsidising Altnets. Zen if offering a Hub to facilitate FTTP providers to increase the ISPs and hence their market share and allow their ISPs to have more scope. Richard Tang has also said that there is currently a 20% cost advantage using Altnets over OR. So if they can’t make the most of that then perhaps they should fall.
They better get a move on though as Ofcom Regulation of OR must and will change either voluntarily or by legal challenge.
Openreach building everywhere is for the benefit of their many ISPs, why discourage the rollout of full fibre for them?
No, failed businesses need to fail so that healthy competitors can thrive.
We also can not just keep expecting government subsidies for every aspect of our lifestyle – we are already on a collision course with the debt markets.
The people who must pay are the customers. They must pay a realistic price for the services they procure. At the moment, these services are heavily discounted to win customers. Therefore, we need a more balanced market so that realistic prices are being charged to customers.
Fara329Light, I question “healthy competitors” – I don’t call BT or VM “healthy”. BT gets more credit than Vermin because at least they operate wholesale through Brokenreach, but its all underlying BT pricing that sets a minimum level and only products offered that BT want to offer by it (for example, no ISP can offer symmetric as standard as a competitive offering)
They are incumbent providers who want to close down competition to lock people into their business. BT had a head start with infrastructure got cheap from tax payer, instead of starting from scratch, and VM benefitted from Thatcher crippling BT back in the 80’s so they could not compete for longer than necessary.
If it wasn’t for ALTNETS, BT would have stayed on FTTC, and Vermin Media on HFC Docsis 3.1.
@anonymous: Any value to be had from your comments is negated by the physiology you sprinkle everywhere.
Your opinions do not match the real world.
“Phraseology”
BTs’ management have to answer to shareholders so even if they had wanted to they would have had a job persuading shareholders to spend £15bn on upgrading the network unless they could convince them there was an existential threat to the business if they did not. The altnets have given BTs’ management the leverage that they needed without a shadow of a doubt.
@anonymous says:
Correct, I refer you to
https://www.ispreview.co.uk/talk/threads/dr-peter-cochrane.43528/
@anonymous Openreach prices are somewhat governed by Ofcom to prevent them undercutting the altnets. The altnets were screaming about unfair competition when Openreach introduced the Equinox 2 discount scheme.
@Big-Dave: BT started on the fibre rollout before many of the “AltNets” came into existence.
@Far2329Light True, but nowhere near the scale they are building now.
@Big-Dave: In those days, BT operated 27 networks, all of which had to be integrated onto a core the architecture of which was not finalised until later. BT is not a minor player in just one sector. BT is also outbuilding all the other providers, many of whom have stopped because the largess has dried up.
@Fara329Light, what do you call a realistic price? I pay £35 a month for 500Mb/s, I think that is a realistic price. Much more than that and I would start to wonder if this broadband internet thing is worth the cost.
While there are people paying the same price with large families, so no doubt using a lot more data and bandwidth that I will ever use, I sometimes think I am subsiding them. I know broadband don’t work in the pay for what you use format, but I think for some people it will be better for them.
The only reason I kept to 500Mb/s is that the difference between it and 200Mb/s price wise is only 2 quid a month, so not worth changing just to save £2.
Maybe you want us all to pay Zen prices or even A&A.
I am sure those ISPs have their places if you want great customer service or have a business, but for the majority of people they will be out of their price range
I chat to a few people these days who are wondering if they really need home broadband, put the prices up too much and these people will dump them.
@Ad47uk: A realistic price is the one that allows the provider to make a profit from a sustainable business model. That would be around three times what you are paying now.
Former BT CEO Philip Janssen predicted it would end in tears for the altnets and got his knuckles rapped by Ofcom for doing so. I would therefore suggest that they should not view Fries’ comments favourably either. Question is who would they rescue and when. A lot of these networks seem to be overbuilt with VMO2 anyway so unless they see it as a cheap way of upgrading HFC to FTTP (and we know it’s an absolute balls ache integrating a even relatively small altnet), would they really want to go down this route?
Something really fishy in all of this. Who is to say that Netomnia (and others that are doing OK) NEED rescuing?
A conversation that sounds hell bent on broadcasting doubt to prevent customers signing up because they will worry about service continuity, bending all the ALTNETS to Vermin M? Brown envelopes was a vision suddenly in my mind, but to be fair they could be white envelopes too.
VM in particular has been hamstrung by the fact that their HFC network is itself a patchwork quilt as it was also formed by acquisition. Look at their landline phone user guide as an example of this, as the “colours” denote different phone switch manufacturers. There were also parts of the network that didn’t support two way services (ie no broadband) until relatively late in the day.
Where overbuild exists, I also can’t see VM swapping their own duct network for a former altnet that might have been substantially built with Openreach PIA.
@ anonymous:
No one is suggesting anything about the AltNets in the way you imply. The comment was about the back-channel intervention of government minister.
Most alt nets are far to small to survive. They will eventually candidate
@anonymous: “Who is to say …” The investors and those involved in the leadership of the sector. The numbers speak for themselves.
“…step in and rescue struggling alternative networks.” by acquisition/merge and reduction of competition to stop VMO2 CHURN. He is blatantly arrogant, to say the least.
“Jonny Reynolds” – actual LOL.
If Ofcom wasn’t busy thinking of ways of closing GBNews, it would have given regional licenses for Altnets to build so they would be able to grow rationally, experience no overbuild, and then more smoothly come together to form a third network.
But they didn’t, instead Ofcom spent years trying to write legislation to police the internet for mean tweets.
You can’t hate the institutions in this country enough.
The cable companies had exclusive regional franchises and they were financial disasters too. It took consolidation and use of generous US bankruptcy laws for them get out of that hole.
That was with BT being banned from competing in any meaningful way. No fibre rollout and a total ban on TV services should they invent a way of doing so over copper (what would become ADSL)
In your hypothetical example, would you be suggesting the same ie Openreach couldn’t upgrade or “overbuild” its own network?
Ivor – Openreach +1 would have helped mitigate the impending doom.
Ofcom basically wanted a third national network so Openreach + VMO2 + 1 other. I would personally given the altnets a limited time exclusivity (say 4 years) on any particular area and if they didn’t deliver on time they would be fined and permanently barred from that area so it would discourage them from land grabbing what they couldn’t deliver on.
I read in The Times earlier that Telefónica may be looking to take control of VMO2, which could pave the way for Liberty Global to target altnets—particularly CityFibre. But it’s anyone’s guess how this will play out.
It’s quite arrogant of Mike Fries to claim all altnets are struggling. I’ve personally switched from Virgin Media to YouFibre (Netomnia), and I’m not alone.
The real issue—one that BT, Virgin Media, and even Sky seem reluctant to face—is that more and more people just want broadband. And frankly, their business models aren’t built for that shift.
Context VM gig broadband on there HFC network 72.5 a month. You fibre gig £33.Easy choice for me
It’s not arrogant to state facts. All of the altnets are losing money, some are still EBITDA negative.
@Wintson
It’s not quite as simple as saying “all altnets are losing money” — that’s a sweeping generalisation. Yes, some are still EBITDA-negative, but EBITDA is just one measure, and it doesn’t always tell the full story about a company’s long-term viability or growth trajectory. Plenty of high-growth infrastructure businesses run negative EBITDA in early phases — that doesn’t mean they’re failing, just that they’re investing heavily.
What I took issue with was the tone of Mike Fries’ comment. It didn’t sound like a neutral observation — it sounded like someone trying to undermine an entire market segment while ignoring the reality that customers are moving to altnets in large numbers. I’m one of them — I went from paying £72.50 for a gigabit on VM’s HFC network to £33 on YouFibre. That’s not a marginal difference. That’s a broken pricing model for the incumbents.
If the big players want to keep dismissing the altnets rather than adapting, they risk losing even more ground.
Telefonica are clearly keen on consolidation with its recent comments. It also announced the completion of another South American operation earlier today – possibly to build up an acquisition fund.
@Far2329Light
You’re right — Telefónica has been signalling interest in consolidation, and the recent South American divestment could well be part of a strategy to free up capital. That aligns with reports about them wanting to take full control of VMO2.
But I think that focus misses the bigger issue: regardless of who owns what, the traditional providers aren’t responding to what the UK broadband market is telling them — that customers want simple, affordable, broadband-first services. Not bundles, not legacy pricing, and certainly not the overengineered packages that suited the old model.
Altnets like Netomnia, CityFibre, and others are responding to that demand directly, even if they’re not all profitable yet. And that’s the point — it’s not just about ownership structures or financial engineering, it’s about who’s actually listening to customers and delivering value. That’s what will matter most in the long run, regardless of what Telefónica does next.
@Jojo: I feel obliged to point out an obvious fact: BT/EE TV, Virgin Media and Sky are broadband, Pay TV, phone and mobile providers, and thus have very different business models to altnets who provide just broadband. VM charges a lot for broadband but the cost for other services falls as you bundle more. I’m pretty sure that for Sky phone costs nothing extra on PAYG and, in the case of VM, your bundle price rises if you exclude phone. So, it’s an apple and pears comparison to just look at broadband prices.
@Roger_Gooner
You’re absolutely right that the legacy players like BT, VM, and Sky operate different business models — broadband bundled with TV, phone, and mobile — whereas most altnets focus solely on broadband. But that is exactly the point.
What we’re seeing now is a clear shift in consumer behaviour: more and more people don’t want or need the bundle. They want fast, reliable broadband at a fair price — and altnets are delivering that without trying to upsell TV boxes or landlines. So yes, it’s an apples-to-oranges comparison — because consumers are actively rejecting the fruit salad and just asking for the apple.
Bundling used to be a strength, now it’s often a trap. For example, with Virgin Media, excluding a phone line can actually increase the cost of your broadband. That might make sense in their billing system, but to the end customer, it feels like being penalised for not wanting outdated services.
So while the pricing structures differ, it’s entirely fair to compare standalone broadband — because that’s where the market is heading. And the providers who don’t adapt risk being left behind by leaner, more customer-focused models.
@Jojo: I was interested in your comment regarding Telefonica wanting to take control of VM02, however, I could not find the article. Meanwhile, the leadership of Telefonica is making proposals to expand involvement in other sectors in order to encourage the EU to allow greater consolidation across the EU. However, there was also a comment suggesting that this hoped-for easing of regulations by the EU would impact Telefonica’s ambitions and thus they will not move until the intent of the EU is known.
@Jojo:
Regarding not listening to customers, yes; the intent of consolidation is to improve returns via the benefits of scale, and considerations of customer aspirations will be secondary to generating better returns on assets and debt. I expect that there will be a marked shift over the next decade to turning the businesses into cash-positive units with a de-emphasis on investment in fixed-line infrastructure, given roll-outs are near completion and that 6G will be arriving post 2030.
I would also make the points that Telefonica is a legacy provider, and many stick with such players because of the discounts they can offer across multi-play bundles. The lack of bundles has been cited as one of the reasons for the slower-than-expected take-up experienced by several of the AltNets.
@Jojo: “it’s not just about ownership structures or financial engineering, it’s about who’s actually listening to customers and delivering value.”
No, it is not. The backers of all these businesses, not just the AltNets, have invested in them, expecting returns on those investments. The plans for all providers have had to be adjusted to match financial realities. It will always boil down to commercial considerations in the end.
@Far2329Light
1. Telefónica & VMO2 takeover talk
You’re correct that Telefónica’s leadership has publicly expressed interest in consolidation across Europe, and reports note they’re “drawing up plans” to potentially acquire Liberty’s 50 % stake in Virgin Media O2 (VMO2). (I am sure ISP Review posted something and capacity media.com).At the same time, Telefónica’s COO Emilio Gayo has said they’re “very happy with the current situation” and that “no deal is on the table.” So yes, there are indications this is being explored—but equally, there’s nothing confirmed yet and the EU’s stance on consolidation will heavily influence the timeline.
2. Consolidation vs. consumer focus
You’re right that consolidation generally aims to boost returns by realising economies of scale. Telefónica’s strategic review is geared towards turning investments into cash-positive units — likely with slower capital expenditure once fibre roll‑out completes and in anticipation of future 6G developments.
But that doesn’t negate what consumers are signalling: they want fast, reliable, and cost‑effective broadband — just broadband, without bundle extras. That’s why altnets are gaining traction by offering better value—even if some are still EBITDA-negative—as they’re focused on delivering what customers actually want.
3. Bundles — strength or drag?
Yes, legacy players use bundles (broadband + TV + phone) to lock in customers. But that structure has become a barrier for people who don’t want those extras. If you choose broadband-only, you can end up paying more, as you discovered with Virgin Media excluding a legacy phone line. That makes the bundle model feel like it’s penalising customers for removing unwanted services.
The bigger picture? Millions of people are ditching their TV licences altogether — moving to streaming-only platforms like Netflix, Disney+, or YouTube. Others are even turning to IPTV or dodgy firesticks. That may not be ideal, but it clearly shows that the traditional Pay TV model — once the anchor of the bundle — is rapidly losing relevance. People no longer want bundled services built around outdated media habits.
Meanwhile, altnets are offering exactly what this new consumer behaviour demands: fast, uncoupled broadband at a fair price.
4. Commercial realities always prevail
Absolutely — whether Telcos, altnets, or VMO2, every provider has investors pressing for returns. Telefónica is no different. Their strategic adjustments—whether further infrastructure investment or retreat—will be guided first by business viability. But successful providers will be those who align both commercial objectives and evolving customer expectations.
@Jojo: I found the original claims were made in the Telegraph back in May and was later picked up by other publications. However, this claim was made after the April announcement of Telefonica’s Strategic Review. I suspect that the claim is based on the optioneering being undertaken as part of the review rather than being a formalised proposal within the business at this time.
@Jojo: Consolidation vs. consumer focus
There will be a balance, but it will be based on a shift towards cash-positive business models, with customers having to pay more. Customers might want higher bit rates, but are they prepared to pay realistic prices?
Most customers would seem to prefer the bundles while there will also be those who just want broadband, but as pointed out by leaders in the Altnet sector, the absence of bundles appears to be at least one of the factors in holding back take-up. Several of the AltNets appear to be looking at providing bundled options to boost those numbers.
@Jojo: Bundles — strength or drag
Not all bundles include TV. They are still good value for those who take up the offers. If you just want broadband then that is available and you will likely pay more. However, you are not comparing like for like when looking at current pricing. The debt funded discounts will not last much longer. Once the investor largeess moderates we will see more realistic pricing dominate.
P.S. I’ve not mentioned issues with Virgin Media – I am not one of their customers.
@Jojo: Commercial realities always prevail
Indeed. As the market consolidates, providers will continue to offer what customers want at a realistic price, free of debt subsidy and a premium for paying down existing debt.
@Far2329Light1. Telefonica & Strategic Review Context
Yes, you’re right — the original claims about Telefónica seeking full control of VMO2 appeared in The Telegraph back in May, likely linked to the broader strategic review announced in April. I agree that it’s probably part of scenario planning (optioneering) rather than a formal move — but the fact that it’s being actively reported does suggest it’s a live consideration, especially as Telefónica trims assets in other regions and weighs up EU regulatory mood shifts.
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2. Consolidation vs. Consumer Demand
I fully agree that a cash-positive focus is emerging, and we’ll see price corrections as debt-fuelled discounting ends. But the idea that consumers will just accept higher pricing assumes they have no choice. That’s the exact assumption altnets are challenging — and in many cases successfully so.
Yes, bundles work for a segment of the market. But let’s not overstate that demand — the fact that millions are dropping their TV licences, moving to streaming, or turning to IPTV boxes, speaks volumes. The legacy bundle model is being tested in ways we haven’t seen before. And while some altnets are exploring light bundling (e.g. adding VoIP or streaming perks), the trend is clear: consumers want flexibility and price transparency.
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3. Value of Bundles & Pricing Trajectory
I get the point that not all bundles include TV, and for some users they offer good value. But we shouldn’t confuse current value perception (boosted by discounts and cross-subsidies) with long-term sustainability.
As you rightly said — once debt-funded incentives taper off, we’ll see a new pricing landscape. When that happens, consumers may re-evaluate who’s really offering value. If they’ve had a taste of cheaper, straightforward broadband through altnets, they may not be quick to return to legacy pricing structures.
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4. Commercial Reality vs Customer Focus
Absolutely — no provider survives without commercial viability. But what I’m challenging is the idea that investor return and customer satisfaction are somehow mutually exclusive. They’re not. The providers who figure out how to deliver both — a lean operation, meeting modern consumer expectations and turning a margin — will be the ones that survive consolidation, not just those with the biggest war chest.
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✅ Final Thought
This isn’t just a financial chessboard. It’s a market in the middle of a behavioural shift. Legacy players are consolidating to protect returns. Altnets are scrapping for share by targeting frustrated consumers. Somewhere in between, the future market leaders will be the ones who adapt to both sides of that equation.
@Jojo:
Telefonica & Strategic Review Context
I think it was mostly the Telegraph attaching weight to the story to improve readership. It has come out with several stories recently that have attracted attention but have not been followed up by other media (other than those that just repeat the Telegraph claims) with secondary information.
Telefonica has the backing of the Spanish Government, but also has high debt levels. It might well raise funding, but then do we want another Telefonica-controlled operation that would be stripped of investment to prop up the parent business in Spain? The UK is also a separate jurisdiction; we do not know what its intent is towards the UK. The option will likely have been considered, but also alongside options to sell the holding or opt for the market listing.
So it is possible, but difficult and one of many options available with regard to the UK operation.
Consolidation vs. Consumer Demand
There are only three major players in wireless in the UK. The consolidation into three major multi-play providers will inevitably drive up customer revenues, particularly around wireless.
TV/streaming is not offered in all bundles. Bundles will continue to help retain customers in the multi-play providers. Most of the smaller providers are not offering multi-play, but many of them are also looking at options to do so. Yes, there is customer demand just for the provision of broadband, but the smaller, limited offerings players make up a small fraction of the broadband market, with most holding less than 1pc market share (the top five providers, with bundles, hold about 86pc of the market).
Value of Bundles & Pricing Trajectory
Many of the existing “AntNets” will not exist in the timeframe for consolidation, and those that do survive will be moving to sustainable business models rather than chasing market share. The market will calm down, prices will go up, with consumers left with no alternative other than to pay realistic prices.
Commercial Reality vs Customer Focus
You are right, they are not mutually exclusive, yet the move to profitability will see the range of choice decline.
@Far2329Light1. Telefónica & Strategic Review
I agree the Telegraph likely added some weight to the speculation — but it wasn’t without basis. Telefónica’s strategic review, the timing of Liberty Global trimming its footprint, and hints from Telefónica’s leadership about market positioning all point to some level of exploration. Whether that results in full control, a sale, or a market listing — you’re right, it’s one of several options, and not guaranteed.
The more interesting question is: should Telefónica take control of VMO2 in the UK? The concern that it might redirect capital to Spain or hollow out UK operations is valid — especially given their debt levels. That’s where regulatory oversight and national interest will likely come into play, as it did in Spain when the government protected Telefónica from foreign acquisition.
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2. Consolidation vs. Consumer Demand
Yes, UK wireless is already heavily consolidated — and any further convergence among multi-play providers could absolutely raise average revenues per user (ARPU), particularly on mobile. But there’s a danger in mistaking market share for customer satisfaction.
The fact that multi-play providers still dominate the market isn’t surprising — they’ve had decades of head start, brand trust, and national infrastructure. But that doesn’t mean the model is futureproof. The real story is in the trend, not the size:
TV licence cancellations are rising rapidly
People are unbundling their services
Altnet satisfaction scores are often far higher than the legacy players
Even if altnets only hold 1% share now, that doesn’t invalidate the growing appetite for streamlined, broadband-only offerings.
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3. Value of Bundles & Pricing
You’re probably right that some altnets won’t survive — that’s the nature of rapid market expansion. But to suggest consumers will have “no alternative but to pay realistic prices” assumes that there won’t be any successful challengers left to keep pressure on the market.
Let’s be honest — what legacy providers consider “realistic pricing” often means inflated pricing propped up by inertia and lack of competition. If a leaner altnet can deliver 1Gbps for £30–£35 with great customer service, many won’t see a reason to pay £65–£75 just to stay loyal to an old model.
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4. Commercial Reality vs. Customer Focus
You’re absolutely right — some rationalisation is inevitable, and not every challenger will survive. But this doesn’t have to mean a worse outcome for consumers.
The altnets that do survive will be the ones that balance sustainability with customer alignment. That’s a win-win, not a loss. And if consolidation leads to less choice and higher prices, it opens the door for a new wave of disruption all over again — that’s the market cycle.
I respect that big telcos need to evolve toward profitability, and that consolidation will be part of that story. But let’s not lose sight of the core issue: people are tired of bloated bundles, opaque pricing, and poor service. Whoever listens to that message — whether a legacy giant or a surviving altnet — will earn the next decade of loyalty.
If so many are of the opinion that this comment was targeting any provider, they are as bad as the minister who has no practical business experience.
If a provider were to get into difficulty, the first problem with any white night rescue is the level of debt held by the failing business and who would take it on in the event of a takeover. None of the major players will want to take on more debt unless the takeover is clearly advantageous to their business. Note that UK debt now bears the highest premium of all the major economies.
Further, there is all the complexity of what to do with the assets. The network might be standalone, or be provided by one or more third parties, which implies new contractual obligations for the buyer, which would have to be looked at in detail before any agreement of a deal. Any migration would cost money, and that is before the redundancy costs.
Ofcom might also impose constraints on customers’ contracts. However, many of these contracts are based on heavy discounting. Any business taking on a failed provider will want to terminate these contracts and apply realistic prices in a year or less. The level of the discounts is simply too high.
The current owners would take a loss, as would any buyer unless the government subsidised the takeover. However, this is the crux of the problem. The government’s finances are broken. It has made spending commitments that can not be covered under the current level of government revenues. The government is also liable for a substantial bill for Thames Water and thus will not want to have to bail out a minor failed provider. Thus, the need to pressure the major players as providers of last resort.
This is not realistic, and so something will have to give.
Consolidation will have to happen. They will either be bought out or allowed to fold then they can be bought up minus the debt
@Bob: Yes, there are a number of paths towards consolidation in the market.
Now that it’s been wired up, most of my street are dumping Virgin because they now have a choice of BT FTTP or an AltNet FTTP product.
Virgin might offer a cheaper product but that comes with abysmal customer services and regular outages – 2 in the last 3 months with one lasting 4 days for the whole road.
Many people say they don’t like Virgin and will get shot of them as and when they can.
As we all know most of the 100 plus altnets cannot succeed, but a completely free market solution of acquisitions will leave some altnets shut down with their customers without broadband – which is counter to government strategy of achieving nationwide gigabit-capable broadband by 2030. So, the government will have to do something and Fries I think was testing the government’s willingness to agreeing altnet takeovers (even if tacitly).
I’ll go even further: as altnets inevitably fail, and especially if those failures leave customers stranded, in the next few years I think the government will set up a “Provider of Last Resort” type arrangements to enable stronger ISPs to migrate the customers of the altnets. This isn’t new as there are already SoLRs in place in the energy and financial services industries.
The government might well have to intervene, but who is to cover the costs for “social purpose”, non-commercial coverage? Ofcom will also want the big players to respect customers’ existing contracts but will they be providing funding to the businesses that step in or will businesses be allowed to set customer prices at a realistic level?
The probability is that the government, via OFCOM, will set interim prices (say for 6-12 months) similar to the altnet prices and manadate no penalty fees if customers migrate to another ISP at the end of the interim period. This would mean no customer or political backlash and also be consistent with how OFGEM deals with failed energy companies where customers were not subject to big price rises.
@Roger_Gooner: That kind of policy would leave the acquirer with big losses with little to show for taking on extra debt/poor quality assets. I would expect the larger players to push back against any such interventions from Ofcom given market, financial, and economic projections.
@Far2329Light: PoLR is about ISPs appointed by OFCOM to migrate customers of failed altnets. Taking over failed businesses is another matter entirely and nobody is compelled to do so.
@Roger_Gooner:
Unfortunately, the same questions arise in both cases. There will be considerable costs involved in both cases, leaving the acquiring party out of pocket. Small operations might be digestible, but that would not be the case for even the medium-sized players. There will have to be pushback and bargaining with Ofcom on any such deal, with Ofcom pressed to offer sweeteners and/or funding.
@Far2329Light: The point is that if PoLR is established the big players will ultimately have to accept OFCOM’s decision on which of them is nominated to migrate the customers of a failed altnet. This won’t necessarily be an obvious or easy decision and no doubt there will be discussions between OFCOM and candidate ISPs, but ultimately a decision must be made as loss of broadband is regarded as unacceptable. In any case most customers migrated will probably stay with their new ISP and thus provide a steady flow of income.
@Roger_Gooner:
I fully understand that, but again who is to cover the costs and losses? Existing providers will have to push back unless the costs are covered by Ofcom or the government.
Many alt nets are dependent on government subsidies at least during the build phasr once they go they struggle to gain enough revenue’s and profit