VMO2 reportedly seeking investors for wholesale network project

That is, if we believe Bloomberg’s ‘people with knowledge of the matter’, who reckon VMO2 is chatting to potential investors with a view to raise around £1 billion in the venture, which is a joint effort between VMO2’s parent companies: Telefónica and Liberty Global. The report values the nascent JV at £5 billion, so it looks like they’re looking to flog 20% of it.

There isn’t much more to the short report, which nonetheless required the combined efforts of three journalists to write, who even then needed the further assistance of a fourth. Generally stories like this leaked to prominent business press outlets are trial balloons, designed to gauge public response to a potential development while still retaining full deniability if it fails to materialise for whatever reason.

You would expect Telefónica and Liberty Global shareholders to welcome the decision to seek alternatives to taking on yet more debt, even if that does dilute their stake in the JV. The story also serves to offer a sign of life for a project about which we have heard little since its announcement last February.

It does beg the question of why a company that has already invested so much in building out its fixed network should still need to much extra cash. More recently Opensignal opined that VMO2 should be able to give Openreach a good run for its money despite having a distinct coverage disadvantage. It seems fair to assume, therefore, that majority of any new money raised would be spent on VMO2’s coverage footprint.