VMO2, Liberty Global and Telefónica plan to create a new Openreach rival

The entity, currently simply referred to as NetCo, promises to ‘underpin’ full fibre take up and roll out, provide new financing optionality and a platform for potential altnet consolidation, and offer ‘clear wholesale choice at scale’ for other providers.

It will be a fully consolidated subsidiary of VMO2 and will comprise of the operator’s cable and fibre network assets covering 16.2 million premises across the UK today.

Through a wholesale agreement, NetCo will connect Virgin Media O2’s entire fixed customer base. VMO2’s mobile assets will not form part of the operation, and nexfibre, the fibre joint venture between Liberty Global, Telefónica and Infravia, will continue to operate separately focusing on fibre expansion in greenfield areas.

Once all the planned fibre build is completed, the new NetCo and nexfibre networks will reach a combined total of up to 23 million homes, so says the release, ‘which will see clear fibre network competition at scale in the UK reaching around 75% of the country.’ Collectively, VMO2 and nexfibre claim to have a full fibre footprint of more than 4 million premises at the moment.

“This is a logical evolution of our fibre strategy that creates a clear, focused and scaled network entity within the Virgin Media O2 family which underpins our shift to a fully fibre network and reinforces our position as the leading challenger to Openreach in the market,” said Lutz Schüler, CEO of Virgin Media O2. “Working closely with our shareholders, this network business will provide a platform for potential altnet consolidation and wholesale opportunities in future, offering widescale network choice for other providers, as well as giving financing optionality. While nothing changes today work is well underway and you’ll hear more from us later in the year.”

Kester Mann, Director, Consumer and Connectivity at CCS Insight told Telecoms.com this is a positive move for end users and for competition: “Virgin Media O2’s plans to move into the fixed-line wholesale market by offering access to its fibre and cable networks to other providers represents a direct challenge to BT’s Openreach unit. Creating a new network company with a dedicated team could enable Virgin Media O2 to pursue merger and acquisition opportunities in the fixed-line broadband market. With dozens of alternative providers, the UK is ripe for consolidation and such a move would bring Virgin Media O2 crucial scale benefits.

“Attention will now turn to which providers would consider signing up with the new entity, how it could be regulated and whether there will be any response from Openreach. The move should be considered as a positive for UK broadband customers as it creates fresh opportunities for new and existing service providers and long overdue competition to Openreach.”

Further details and operational timelines will be announced in due course, we’re told, subject to any necessary regulatory approvals.