CMA Fast Tracks Nexfibre £2bn Netomnia Broadband Merger to Phase 2 Competition Probe

The Competition and Markets Authority (CMA) has today announced that it will skip a Phase 1 review of the proposed £2bn acquisition (here) of alternative full fibre UK broadband operator Netomnia (Substantial Group) by nexfibre (Liberty Global, Telefónica and InfraVia), which will instead see them skip right to a deeper Phase 2 competition investigation.

Just to recap. The owners of nexfibre, which share some of their parentage with Virgin Media and O2, announced in February 2026 that they’d reached a £2bn agreement to acquire alternative network rival Netomnia (here), which had at the time already deployed their own full fibre (FTTP) network across 3 million UK premises (rising to c.3.4m premises and 500k customers by deal completion – expected by Q3 2026).

Nexfibre stated the deal would unlock £3.5bn of investment in the UK market and help to upgrade 2.1 million of Virgin Media’s premises from coax (HFC) to full fibre (FTTP). The combined nexfibre and Netomnia footprint is expected to reach 8m premises (FTTP) by the end of 2027, which when combined with Virgin Media’s network could collectively reach 20m premises (c.10m if only looking at FTTP) and create a “scaled, financially secure challenger” to Openreach (BT Group).

However, critics of the deal, particularly CityFibre, which had also been trying to acquire Netomnia before the nexfibre move was announced, stated that there was a lot of overlap between the nexfibre / Virgin Media and Netomnia broadband networks. A Point Topic study put the figure at 832,000 premises, albeit only when looking at the FTTP side of these networks (here); there’s much more overbuild with HFC (see ‘Key Points’ below).

The CEO of CityFibre, Simon Holden, warned that the proposed agreement would “significantly reduce competition and the choice available to consumers, as well as force hundreds of thousands of Netomnia customers back to VMO2” – potentially raising the prospects of the UK returning to a duopoly between Virgin/nexfibre and Openreach.

We should point out that YouFibre is expected to adopt a similar approach to giffgaff on nexfibre’s network. The brand will thus be maintained, at least initially, with some separation. But over time there are concerns that negative changes could still sneak in (e.g. mid-contract price hikes).

Key Points of the Nexfibre + Netomnia Deal

➤ InfraVia, Liberty Global and Telefónica are committing £1bn in new net funding for nexfibre to fund the transaction – made up of £850m from InfraVia and £150m jointly from Liberty Global and Telefónica.

➤ Nexfibre will sell Substantial Group’s retail business, including the YouFibre brand (Brsk has been retired), to VMO2 for £150m – covering c.500,000 customers.

➤ Nexfibre will finance the FTTP upgrade of 2.1 million homes covered by Virgin Media’s old HFC network (i.e. those that are “adjacent” to the Netomnia footprint). We’ve already seen this process begin (here).

➤ VMO2 will pay wholesale fibre access fees on its customers within the 2.5 million VMO2 homes that overlap the Netomnia fibre footprint.

➤ In exchange for the wholesale traffic commitment on the 4.6m premises, Virgin Media O2 will receive 1) c. £1.1bn in cash and 2) an indirect 15% stake in nexfibre. The vast majority of the proceeds will be available for deleveraging and the £150m to finance the purchase of Substantial Group’s 500,000 customer base.

➤ VMO2 will provide a full suite of managed services to nexfibre – including construction – in return for ongoing management and construction fees.

The big question was thus whether the CMA would throw up any major stumbling blocks for this deal or rubber stamp it, particularly as the Government had already given a broadly favourable response to the pairing. The prior expectation was that, given the size and scope of the agreement, the CMA would be likely to proceed to an initial Phase 1 review process.

However, rather than take the risk of delays from needing to go through a Phase 1 and then, possibly, Phase 2 competition review, the parties involved have instead opted to request a fast-track right to the deeper Phase 2 investigation. The move could be seen as suggesting that they were anticipating the CMA finding competition concerns in Phase 1, which would thus have necessitated a Phase 2 probe.

According to the CMA’s decision to refer (PDF): “On 11 June 2026, the Parties requested, pursuant to section 34ZD of the Act, that the CMA make a fast-track reference for an in-depth investigation at phase 2. The CMA has concluded that the conditions to accept a fast-track reference request under section 34ZF(3) of the Act are met. Further, the CMA has decided that it would be appropriate to accept the fast-track reference request and proceed to a phase 2 investigation.”

Rajiv Datta, CEO of nexfibre, said:

“We requested a fast-track to Phase 2 to get to the right answer faster; ensuring due process, while recognising urgency. We look forward to continuing our constructive engagement with the CMA.

This deal would create the scaled, sustainable alternative to the BT Openreach monopoly, something the UK market still lacks. Every day of delay reinforces the incumbent’s advantage and slows the progress of genuine competition.”

The fast-track path normally requires that there also be sufficient evidence for the CMA to conclude that the legal test for a Phase 2 reference (i.e. that a merger is or may be expected to result in a Substantial Lessening of Competition (SLC)) is met, although this question will be fully analysed as part of the Phase 2 investigation. Nexfibre and Substantial Group themselves have not conceded that the merger could reduce competition in the supply of fibre broadband or any other services.

The move makes it much more likely that the CMA will be able to complete their competition probe in 2026, rather than 2027. In addition, given the CMA’s recent flexibility toward big telecoms mergers (e.g. Three UK and Vodafone) and the Government’s position, it’s not unreasonable to expect that they may ultimately allow the deal through. But this is certainly not guaranteed.

However, if the deal is allowed to proceed then it’s possible that the CMA may still extract some concessions from the merging parties. As we’ve said before, we would not be surprised if those included stronger wholesale requirements for Virgin Media’s consumer broadband network and nexfibre, which is something that those operators already seem to be preparing to try and deliver (here and here). Time will tell and at present there’s still a fair bit of uncertainty over the final outcome.

Otherwise, the CMA’s Phase 2 investigation starts immediately, with a statutory deadline of 15th December 2026. The members of the independent inquiry group have been announced alongside the publication of an indicative administrative timetable. The CMA said they will engage closely with Ofcom as part of this investigation and will publish an ‘areas of focus’ document next week, which sets out in more detail the markets the investigation will consider as part of its in-depth review.

UPDATE 8:16am

CityFibre’s boss has responded to the move.

Simon Holden, Chief Executive Officer of CityFibre, said:

“VMO2/nexfibre’s planned acquisition of Netomnia would remove a successful challenger and reduce choice for consumers. With 80% overlap between the two networks, the deal raises significant questions and the CMA is right to take an in-depth look at its impact on UK digital infrastructure and the competition that policymakers, regulators and the altnets are working so hard to establish.”