Key News for Virgin Media O2 as Telefonica’s Strategic Plan to Focus on UK

Spanish telecoms giant Telefónica, which forms part of the joint venture that controls broadband and mobile operators Virgin Media and O2 UK, has today announced the outcome of their recent Strategic Review and set out the six pillars underpinning their new five-year strategic plan. This includes consolidation and retaining the UK as one of their core markets.

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 and nexfibre was on their way to reaching 5 million premises by the end of 2026. 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.

The review caused Virgin Media to take a different approach to opening up their existing broadband network to wholesale (here) and also appeared to stall nexfibre’s roll-out; the planned deployment for 2025 was scaled back from 3 to 2.5 million premises and the roll-out beyond this has been placed into uncertainty.

More recently, the CEO of Telefónica, Marc Murtra, has indicated that he viewed growing scale through buying telecom assets (consolidation and control) as part of his thinking for the future. One such option proposed in the media could even see Telefonica make a play for Liberty Global’s 50% stake in Virgin Media or do something similar with nexfibre. But to do that would require fresh capital, which is not an easy proposition in today’s market. Equally, the operator could support a joint push to consolidate one of their broadband rivals, such as Netomnia (here), which would come with a few caveats.

What’s in Telefonica’s 5-year plan?

The plan doesn’t spell out precisely what Telefonica intends to do in the UK in terms of consolidation, but it does confirm that they will remain focused on the country as one of their “core markets” alongside Spain, Germany, and Brazil — aimed at positioning the operator as a “world-class European telco with profitable scale“.

The plan then talks about adopting a simplified operating model, before acknowledging that investment in the wider telecoms market has been “inefficient due to the operators’ lack of scale when compared to the US and Chinese markets“.

“While it does not include consolidation opportunities, the plan means that Telefónica will be fully prepared to seize any that may arise to create value for shareholders,” said the announcement. On this point there’s some talk about “seizing opportunities in the UK” and the company estimates that a “potential consolidation within its core markets could generate synergies worth between €18–22 billion“. So clearly there’s a consolidation mindset at play.

Telefonica’s Six Pillars (Europe)

➤ Deliver the best in-class customer experience, Telefónica will enhance network performance and customer care across all channels. Service excellence and customer experience are key, and the company plans significant investment in Artificial Intelligence to strengthen both.

➤ Expand the B2C offering, the company will reinforce convergence in Spain and Brazil, expand it in the UK and Germany, and boost ecosystem services to grow B2C revenues and household presence. Telefónica will accelerate both convergence and the digital ecosystem — two key growth drivers.

➤ Scale the B2B and public administration business, Telefónica aims to modernise communication services in Spain and Brazil, seize opportunities in the UK and Germany, and accelerate growth in digital services by leveraging Telefónica Tech, Global Business Units, and local partnerships with companies and sales channels.

➤ Evolve its technological capabilities, the company will invest in fixed and mobile networks, upgrade IT systems, and focus innovation on technologies that enhance its product portfolio, performance, and customer value proposition.

➤ Simplify the operating model, Telefónica will evolve towards a simplified Group operating model, granting greater autonomy to countries and global units focused on critical roles and value creation through scale.

➤ Develop talent, the company will attract and retain the very best professionals across all markets and strengthen a culture focused on impact and execution.

The question of what happens next in the UK depends upon how the other half of their joint venture, Virgin Media, responds. At this stage, there’s still a lack of clarity over what will happen with nexfibre’s build into 2026 and beyond, while questions are already buzzing around which network operators the pair might seek to consolidate. Netomnia is already in the frame, albeit perhaps more as a strategic move to counter CityFibre (they also want to do a deal with Netomnia), since the high level of overbuild with Virgin Media would otherwise make such a deal unappetising.

In the meantime, you can watch the full c.2-hour event below, assuming you enjoy listening to marketing speak for that long (unlikely). Still, even with all the soundbites, it’d still be better than spending the same amount of time watching through the last instalment of the Mission Impossible franchise, but each to their own.