CEO of Telefonica Leaning Toward Buying UK Broadband Assets, Virgin Media etc.
The CEO of Spanish telecoms giant Telefónica, Marc Murtra, has told Reuters that the outcome of their Strategic Review will see the group buying up telecom assets in Europe, which could potentially include gobbling Liberty Global’s stakes in UK broadband and mobile giants nexfibre, Virgin Media and O2 (VMO2).
In case anybody has forgotten. Telefonica and Liberty Global control VMO2 in the UK as part of a 50/50 joint venture. On top of that, Telefonica also hold a 25% stake in complementary broadband network nexfibre, alongside Liberty Global, with both companies sharing the other 50% of the £4.5bn joint venture, which is owned by the private equity firm InfraVia Capital Partners.
At the start of 2025 everything appeared to be progressing normally. Virgin Media was in the process of preparing to open up their existing broadband network to wholesale (NetCo). Meanwhile, nexfibre, which was already open to wholesale, were continuing to deploy their new full fibre (FTTP) network to areas not currently served by Virgin (aiming to reach 5 million premises by the end of 2026).
Advertisement
However, as previously reported (here), the nexfibre build suffered a big hit in the spring after debt stricken JV partner Telefonica launched a Strategic Review. Not only did this result in the scrapping of Virgin Media’s plans for opening up their existing consumer network to wholesale (here), but it also caused nexfibre to scale-back their coverage target for 2025 to 2.5 million premises (here) – roughly 500k premises less than originally expected (build plans beyond this remain uncertain).
Murtra’s plan
Murtra was parachuted in by the Spanish government during January 2025 to lead Telefonica and get its debts (c.£23bn) under control. Since then the company’s CEO has launched the aforementioned Strategic Review and been considering a variety of different options – due to be formally announced before the end of this year. The big question was over which one they might consider for their holdings in the UK.
According to Reuters, Telefonica now appears to be talking up the idea of growing scale through buying telecom assets and freeing up resources by selling its Spanish-speaking Latin American assets. Murtra indicated that they’re specifically eyeing assets in Germany, the UK, Spain and Brazil.
Marc Murtra, CEO of Telefónica SA, said:
“This does not require a titanic shift. All it needs is to lift the brake pedal a little bit and allow the market to operate and consolidate.”
The report suggests that Telefonica could make a play for Liberty Global’s 50% stake in Virgin Media, although we think they might also look to control and then support nexfibre in their recently expressed ambition to grow more scale through consolidation of rivals in the alternative network space. But to do any of this effectively might require an attempt to raise fresh capital, which is not an easy proposition in today’s market (VMO2 seemed to struggle to raise £1bn to support their previous NetCo plans).
Advertisement
The exact structure of Murtra’s plan, at least for the UK, remains subject to some speculation. But the new report does seem to lend some more credibility to earlier ones, which suggested that plans were being drawn up for Telefonica to take control of the 50/50 UK Joint Venture (JV) that it owns with Liberty Global (here).
Both Telefonica and Liberty Global do now have the right to kick off an initial public offering (IPO) for VMO2 after a lock-up period under the terms of the £31bn merger expired last year. But this is tricky, as neither side will want to take on the full burden of all those debts. The terms also allow each partner to sell its stake to a third-party 5-years after the closing, but the other shareholder still has a right of first refusal.
Never a dull day in the land of UK telecoms.
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.
« Problems Remain as UK Broadband ISPs Mark First Year of One Touch Switching
Advertisement
Leave a Reply
Privacy Notice: Please note that news comments are anonymous, which means that we do NOT require you to enter any real personal details to post a message and display names can be almost anything you like (provided they do not contain offensive language or impersonate a real person’s legal name). By clicking to submit a post you agree to storing your entries for comment content, display name, IP and email in our database, for as long as the post remains live.
Only the submitted name and comment will be displayed in public, while the rest will be kept private (we will never share this outside of ISPreview, regardless of whether the data is real or fake). This comment system uses submitted IP, email and website address data to spot abuse and spammers. All data is transferred via an encrypted (https secure) session.
Sort out your horrendous CS indian based “tech support” and pricing first. Then you might gain back some customers.
Ditching long term contracts that double in monthly cost when they end (whilst simultaneously increasing them by 20% every April during the contract) might help VM keep some customers.
Really VM needs to realise the Altnets are replacing them and the monopoly they once had is very quickly disappearing, so they need to be truly “competitive” now.
Every time the word “Virgin media” comes up in daily life I have yet to find one single happy customer.
Does anybody actually think this sounds positive, I personally don’t have a positive thought about Telefonica however I stopped paying too much attention in recent years?
Wonder if Telefonica have deep enough pockets to buy cityfibre too
Telefonica recently stated that it will be focusing on potential targets in Spain and Germany. Both markets are more profitable than the UK, and the respective targets are doing comparatively well. By comparison, the UK market is far more fragmented to the point that the level of competition for revenues is suppressing profitability.
So far, Telefonica appears to have potentially built up a war chest of about EUR 2bn from the sale of South American assets. It will need that and a lot more besides just to take on the Spanish target, which could be valued as high as EUR 10bn.
The VM02 JV is improving, but it would take time and resources to get the business on a profitable footing. It may be a bridge too far from an investment perspective when there are far more attractive options in the EU. If anything, Telefonica may decide to sell down its UK holdings in order to liquidate funds for its higher priority targets in Europe. It very much depends on how the cookie crumbles in the EU, and that will largely be determined by the decision Brussels is expected to take about allowing a 4 to 3 consolidation in EU member state markets.
Nexfibre might be an option, but it lacks critical mass. Building it into a major player (essentially what Telefonica is looking for) through consolidation would take time – perhaps a decade or more. Further, Liberty Global would not want to let Telefonica get full control of Nexfibre if it meant they would be left with the deadwood of the heritage JV.
Things are not clear yet, but that is the way Brussels works and it is in Brussels where the decision will be made that determines the path Telefonica eventually takes.
If Telefonica were to buy out its UK partners and embark on the consolidation of the AltNets to build its presence here, then you can be sure that, due to having an acquisitive CEO, the UK market would see stiff price increases, less favourable terms and a cut in investment to maximise the revenues to feed acquisition plans elsewhere in Europe.
It seems unlikely that a company in such deep debt would choose to go on an acquisition spree. I had always pictured Liberty buying out Telefonica, not the other way round!
That still might be the case. Liberty might see this as a way to make an offer for full control. TEF could then sell and spend the funds elsewhere in Europe.
Nonetheless, Telefonica has been authorised by its owners – including the Spanish Government – to go full tilt with its acquisitions proposals.
@No Name:
Liberty Global is selling off assets. It too is now heavily indebted.
The flip will be the proposal that can turn the various businesses that might be involved in JVs, sell-offs and acquisitions into cash-generative operations. However, neither partner of the VMO2 JV appears to have a game plan that will deliver that outcome in the UK.
@Far2329Light
Liberty Global Are doing well there debit is at a 19 year low £7.75 Billion so not amazing but still very reasonable
@Martin Doyle:
Liberty Global has been selling off assets at a pace and there is no sign of the sell-offs ending in the near future.
Does Richard Branson get a say in who operates a company licensing the Virgin brand?
No, he just takes the money.
According to an article dating from 2103 that was published by Silicon UK, Liberty Global has the right to use the Virgin brand for a thirty-year period, though it is not made clear when the arrangement i set to end.
I read that the VMO2 JV still pay several million pounds a year to licence the Virginmedia name. If Telefonica decide on a full takeover that could be a saving put to better use if they drop the VM part of the name which has a mixed appeal to most people now.
@ PeJay: Splashing out GBP 15bn or more (to save just afew million) on the Liberty Global half of the JV to acquire a business with declining revenue, and a debt leverage in excess of 5x operating in an oversaturated, fragmented market with no prospects of the a turnaround in the medium term, while there is a cheaper option in the Spanish market, which is profitable and which would give Telefonica dominance in a healthy market. Which would you choose?
This all seems a small part of a much more complex global situation for Liberty, and possibly paves the way for different identities depending on the region and consumer. It’s interesting to bear this in mind when I look at the south American market where Cable and Wireless, whilst long departed from the UK, is a major brand in Latin America and has announced recently they are to become Liberty Caribbean.