The owners of Virgin Media O2 have agreed a £2bn takeover of challenger fibre network Netomnia, marking a significant step towards consolidation in Britain’s crowded broadband market.
Liberty Global and Telefónica, alongside InfraVia Capital through their Nexfibre joint venture, will acquire Netomnia, currently the UK’s second-largest alternative network provider.
The deal will expand Nexfibre’s footprint to around 8 million households by the end of next year. Combined with Virgin Media O2’s existing infrastructure, the enlarged network will cover approximately 20 million premises and serve about 6.2 million customers.
That scale brings it close to Openreach, the network arm of BT Group, which has passed just over 21 million premises with full fibre.
Shares in BT fell 2.5 per cent following news of the acquisition.
Founded in 2019, Netomnia is one of dozens of “altnets” that emerged to challenge the dominance of Openreach and Virgin Media O2. However, many smaller fibre operators have paused expansion amid higher borrowing costs and weaker-than-expected customer take-up.
Rajiv Datta, chief executive of Nexfibre, said the enlarged group would offer greater scale to wholesale partners, including Sky, which recently began using CityFibre’s network in addition to Openreach.
The transaction saw Virgin Media O2 beat CityFibre, backed by Goldman Sachs, which has previously positioned itself as a natural consolidator of the fragmented sector.
Simon Holden, chief executive of CityFibre, criticised the move, warning it risked recreating an “ineffective duopoly” between BT and Virgin Media O2 and calling on the Competition and Markets Authority to scrutinise the overlap.
The acquisition will be financed with £850m in equity from InfraVia and £150m from Liberty Global and Telefónica, alongside a £2.7bn debt facility to fund both the purchase and further network expansion.
The deal comes as Virgin Media O2 continues to face customer losses, shedding 18,000 broadband subscribers and 165,000 mobile customers in the latest quarter.
Separately, Liberty Global has agreed to pay €1bn to Vodafone for its 50 per cent stake in VodafoneZiggo, the Dutch joint venture. Liberty plans to merge VodafoneZiggo with its Belgian unit Telenet and spin off the combined entity, Ziggo Group, via a listing in Amsterdam next year.
The Netomnia acquisition signals that consolidation in the UK fibre market, long expected as funding tightens and competition intensifies, is now gathering pace, potentially reshaping the balance of power in Britain’s broadband industry.
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Virgin Media O2 owners strike £2bn deal for Netomnia in fibre consolidation push