Virgin Media O2 Suggests it May Stop UK Fibre Builds if Netomnia Deal Rejected UPDATE
The CEO of Liberty Global (Mike Fries), which co-owns broadband operator Virgin Media (O2) and nexfibre in the UK, appears to have suggested that they could stop rolling out new full fibre (FTTP) broadband networks if the competition regulator does not approve their planned merger with rival Netomnia (Substantial Group).
Just to recap. The owners of Virgin Media (O2) and nexfibre (i.e. InfraVia, Liberty Global and Telefónica) announced last month that they’d reached a £2bn deal to acquire Netomnia (here), which had at the time already deployed their own full fibre network across 3 million UK premises (rising to c.3.4m by deal completion – expected by Q3 2026).
However, many analysts and industry commentators, including ourselves, have remarked at the high level of network overbuild between Netomnia and Virgin Media’s existing gigabit broadband network (less so for the nexfibre side) – excluding overbuild the overall coverage gain is closer to 0.5m+ premises. Much of that overbuild concerns Virgin Media’s legacy network, which is in the process of being upgraded to FTTP (XGS-PON); VMO2 has previously estimated the cost of such work at c.£100 per premises.
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At the same time VMO2/nexfibre have already expressed the deal for Netomnia as being a good way to help speed up their FTTP upgrade programme in areas of overbuild. But this opens up a new area for debate, particularly when we consider that the £2bn price tag for Netomnia works out as a per premises cost of around £600 (somewhat more than that c.£100 figure given earlier).
However, the buyers also gain by removing a rapidly rising competitive player in the alternative network space, which prevents the market’s largest altnet – CityFibre – from securing its own merger with the Netomnia and thus growing the scale it needs to properly compete; this alone could be seen as a win for VMO2, albeit a potentially expensive one and something that the Competition and Markets Authority (CMA) may wish to examine.
What has Mike Fries said?
According to the Telegraph (paywall), Mike Fries is said to have told the New Street Research Conference in London yesterday that “there’s no theory of harm here that stacks up, and I can tell you all the counterfactuals are bad“, before hinting that they could stop their own FTTP deployments if the deal doesn’t go through: “Maybe we stop building fibre, or Nexfibre stops building fibre … the only counterfactual that’s certain is BT gets stronger.”
The CEO also described complaints about the Netomnia deal, most of which have come from CityFibre’s leadership, as “sour grapes … CityFibre was trying to do the same deal so I don’t see how it’s a different outcome for Nexfibre versus CityFibre.” But the CMA seems unlikely to view this deal as merely “nexfibre versus CityFibre” and may well recognise the shared group ownership (i.e. VMO2 + nexfibre versus CityFibre).
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The newspaper doesn’t mention it, but Mike was also asked about the notion of “overpayment” in relation to the deal, which he debunked: “We’re paying £600 per fibre home, that’s a third of what CityFibre has invested per fibre home, so feels like a good price to me.”
We’re presently unsure if it’s accurate to say “a third“, since we’ve seen estimates for CityFibre’s per premises build costs that range between c.£400 and up to £1,000 over the years. CityFibre also builds in Project Gigabit areas, which are more expensive (rural) and thus shouldn’t be compared with their urban build costs.
Mike Fries added:
“The Government has talked about transforming regulation in this country, working at pace, not stifling innovation and growth. This is a test case for that.
Who is going to build a scale-based competitor to BT Openreach? Who has the capital, the wherewithal, the customers? I don’t think there’s anybody else. The Government should see this as a net positive for sure.”
The counterargument here is that there may not be “anybody else” if one of the market’s two dominant network players scoops up the most strategic altnets of any scale. But at the same time, we shouldn’t ignore that a more open access wholesale competitor to Openreach, operating at the same sort of scale as the incumbent, would still bring some competitive advantages.
Of course, Virgin Media’s existing network still has a bit of work to do before they’re as open access as nexfibre, which itself also has some work to do on that front as we’ve so far only seen them launch retail via group ISPs like Virgin Media and giffgaff (a combined VMO2 + nexfibre wholesale product on FTTP / XGS-PON lines is already expected). Recent hints of a wholesale deal with Vodafone may help (here).
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On the supposed threat to stop building, it’s worth noting that nexfibre has effectively already done this. The operator doesn’t currently seem to have much in the way of any future FTTP build plans beyond their current level of 2.6m premises passed (here), at least none that the group has been willing to confirm. Given this context, the suggestion of a stoppage starts to seem a bit hollow.
In the meantime, we’re expecting CityFibre to raise a competition complaint with the CMA, although it remains to be seen whether they can push that into a deeper Phase 2 probe. However, given the CMA’s recent flexibility toward big telecoms mergers (e.g. Three UK and Vodafone), it’s not unreasonable to expect that they may ultimately allow the deal to go through – possibly with some concessions.
Quite what form such concessions, if they do indeed materialise, may take is as yet unclear. But we wouldn’t be surprised if it included stronger wholesale requirements for Virgin Media’s consumer broadband network and nexfibre, which is something that the operators already seem to be preparing to deliver (here).
UPDATE 26th March 2026 @ 8:15am
We’ve had a comment from CityFibre.
A CityFibre spokesperson said:
“For 20 years, VMO2 has failed to challenge BT’s dominance of the market. It’s only now that competition is emerging to both of those players, for the benefit of consumers and the UK. The proposed deal would reduce choice for millions of homes and weaken the competitive pressure that has finally begun to transform the market. We have no doubt the CMA will do a thorough job of investigating the transaction.”
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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Threatening to stop building fibre unless you get your own way, so that a competitor can come along and build a network that offers a choice of ISPs, is not exactly arguing from a strong position.
Also when you are not building…
I emailed the CMA expressing my concerns over this merger and they responded telling me, basically, that they weren’t going to do much and that I should go to OFCOM instead. Their blatant dismissal and (incorrect, in my opinion) assertation that it was OFCOM’s responsibility to look at this and not theirs doesn’t give me hope that they’ll do anything about the merger.
Typical government agency response; pass the buck. I’m surprised they replied, the first tactic is to ignore you, If you persist then you get “it’s not me it’s him” and they send you round in circles. God forbid they do do the job they’re paid to do.
CMA and OFCOM are both useless. Usual public sector parasites – think their job is student union politics at the taxpayers expense.
They referred you to Ofcom likely because they haven’t asked for your input. They may publicly invite ‘stakeholders’ to provide their views on investigations. They don’t take unsolicited opinions from members of the public on investigations they haven’t publicly announced for obvious reasons. Ofcom don’t either: they open consultations up to the public, they don’t have people manning the phones and inboxes to respond to members of the public contacting them over whatever policy matter is on their mind. Front desk and that’s about it, they are not public facing in their day to day work.
https://www.gov.uk/government/publications/mergers-how-they-are-investigated/mergers-how-they-are-investigated
Wait for the invitation to comment. It’ll probably give you contact details that’ll go to someone more relevant than general enquiries.
I think they wont do anything without the government telling them to do so, and the gov seems favourable of the merger.
Whats Mr Fries problem? We all know brown envelopes will exchange and the deal rubber stamped as a great win for the public.
To be honest, I’d rather VM stop building their grossly overpriced fibre, and let the ALTNETS carry on. Nobody would miss the extra build and overpriced products.
Let’s hope it gets rejected then
If they don’t build, they become irrelevant. The regulator should treat coercive threats like these with the contempt they deserve.
You don’t make a threat like this unless you have reasonable cause to believe your deal may get torpedoed.
They’re not all that sure it’s a slam dunk.
Hmm, didn’t know it’s in the hands of the monopolies commission now. Anyways if anyone working for monopolies commission reading this, please say “no” then I’ll buy you a pint, cheers!
You’re a bit out of date JG!
Nobody’s been working for the Monopolies and Mergers Commission since it ceased to exist on 1st April 1999, when it was replaced by the Competition Commission, which also no longer exists.
You could write to the Competition & Markets Authority, but I wouldn’t bother, unless they actually open a public consultation in the matter, otherwise they won’t be at all interested in Joe or Josephine public’s opinion, unfortunately.
Paying £650 per Netomnia customer in overlap areas where you can pay £100 to upgrade existing customers is economics the regulator should be looking into.
It is a type of “bad capitalism” I dislike. Netomnia is kinda profitable now, BT is building at roughly £300 per premises, how do we increase competitivity in a market by taking a profitable company, charging an excess value, loading up with huge amounts of debt, and inevitably raising prices in order to ensure the company can pay off the debt (that previously didn’t exist, at this level)
But don’t worry, the financial loan sharks will get their facilitation fees and huge interest charges paid!
lets get it rejected then and save people from VMO2.
Ok, if it ends up going through, make a condition of the deal be that they are legally required to continue expansion and go wholesale with reasonable prices.
I’m sure they won’t have any objections.
Of course, VMO2 can’t consider the possibility of using that money to invest in themselves and maybe become more competitive e.g. cheaper prices, no mid contract price rises, better CS, etc. Which may make potential customers be ok with their services and not want to leave.
I personally only went with Giffgaff over VM because they’re offered decent pricing, no mid-contract price rises and I wouldn’t be forced to use the 5X.
They have already said that if the deal goes through they will transfer 2.1m premises “adjacent” to Netomnia areas from VMO2 ownership to Nexfibre ownership, upgrade them to full fibre by the end of 2027 and open them up to wholesale along with the rest of Nexfibre + Netomnia.
I’m sure they will have no problem making that commitment legally binding, if the CMA insists. It’s a clever tactic which guarantees more premises will have a wholesale competitor to Openreach if the deal is approved than either the status quo or an alternative Cityfibre/Netomnia merger.
@CJ
They’re already upgrading VM Coax areas to FTTP and I have little faith in them going truly wholesale on their own volition as of now, considering Giffgaff is the only other provider on their network.
I want them to be required to significantly expand their network beyond what they’d already cover after they merge their networks and actual commitment to wholesale if they’re bringing OR into the picture and they will be reducing a network provider.
So stop building Nexfibre / Virgin Media. You sound like a child who can’t get their own way. Just go away and sulk.
In fact stop building and charging high fees for your ISP’s who you will raise their
charges to pay for your takeovers.
Virgin / Nex, whatever you wish to call your companies go away,
Virgin now losing customers for TV, O2 losing customers for mobiles.
They’re losing broadband customers too.
That’s why they need to buy some more lmao
So because Mr Fries has threatened to stop building if he doesn’t get the OK to buy Netomnia (thus taking a big ALTNET competitor out which is the REAL goal here), won’t it crash the integrity of the CMA if they approve it? To me, it would look like caving in to the threat…hmmm…?
It won’t, no. The 4D chess you’re playing isn’t really a thing. The CMA have clear criteria and being seen by a random to be caving in to a CEO’s thinly veiled threat isn’t one of them.
https://www.gov.uk/government/publications/mergers-guidance-on-the-cmas-jurisdiction-and-procedure
A “random” who pays taxes to the treasury, that funds these unelected quango’s.
You have more faith in them than me (and I do know people who work for CMA having worked with them previously).
Criteria is usually woolly so that it can be interpreted a specific way to suit. It’s written in a way that looks defined, but it isn’t (hence lawyers then arguing over it, and best one wins).
Awful firm from their management, and pricing policy, down to their aerial cable Broadband, still in use.in many areas. This takeover needs to be rejected by Ofcom.
Would usually be called coaxial not aerial cable. Aerial cable is coaxial between an aerial and whatever.
Part of the deal involves upgrading millions of those premises with coax to full fibre.
It’s not Ofcom who decide whether it goes through or not.
@Polish Poler: Very well aware of what coax is, have installed many satellite and aerial systems, including mastheads, Diplexers, Splitters, Distribution Amplifiers etc. Just using aerial cable, as a slightly derogatory term in relation to Virgin, who have yet to complete their ongoing build update to Full Fibre, which you seemingly missed. Thank you for your attention to this matter. 🙂
An aerial cable is a coaxial cable between antenna and device.
Aerial cable is cable that runs overhead, between poles.
Why be obtuse?
Have any ISPs spoken out against this takeover?
It’s all good and well to moan about this on the comments section of a news article on a website, but it would be handy to have links/email addresses of the people that have concerns about this proposed takeover to contact.
No deal!!!!!
And I’ll scweamandscweamandscweam until I get my own way…..
1400565/2026 – Mr D Rothschild & Mr M Islam vs YouFibre Limited
Case going on at Bristol tribunal according to public register information.
Can’t wait to see the verdict from the judge.
Employees were apparently promised shares and these 2 individuals had the guts to raise whistleblowers concerns under public interest regarding shares. Staff were promised shares then shares were taken away.
Not sure what Netomnia has to day about this.
Very interesting case gobsmacked.
I wouldn’t be happy if my company promised me shares then didn’t give it, BT is an amazing place to work.
Has Mike been reading The Art of the Deal recently?
Perhaps ĥe’d be better off with “How To Win Friends & Influence People”.
I’d just like an alternative network to Vmo2 and OpenReach, alas no AltNets seem interested in building where I am. So, if part of this deal means VMo2 are forced to fully open up their entire FTTP network to wholesale and I have a choice of something other than a VMo2 ISP then I suppose it’s the least worse option. But I’d much rather an decent AltNet. built in my area but it would be overbuilding both OR and VMo2 and in my area I’m not sure that’s going to bring a huge amount of business in, that said as more young families who are more likely to consider AltNets move in, maybe the maths changes.