Virgin Media O2 Plans Joint Fibre Venture in Broadband Push, Reports Say

The owners of Virgin Media O2 have initiated talks to raise hundreds of millions of pounds from investors to fund the rollout of fast fibre broadband to millions more British households. 

Telefónica and Liberty Global, who managed the merger of Virgin Media and O2 to create the developed group last year, will start contacting potential investors this week but some informal discussions have already begun, according to a person with knowledge of the plan. 

As such, BT’s Openreach division and several smaller so-called “alt-nets” backed by billions in private capital are racing to roll out fibre across the UK, replacing their copper and cable-based networks to provide high-speed connectivity to millions of homes. 

BT has already committed to spending £15bn to provide full-fibre networks to 25m homes by 2025, while around 50 alternative companies have entered the market, looking to provide connectivity in more rural areas or partner with more established telecoms companies. 

Its objective will be to build up to seven million fibre-to-the-premises homes in areas of the country where Virgin Media O2 does not have a meaningful presence. 

The merged Virgin Media O2 is one of the biggest communications businesses in Britain, with a major presence in mobile and fixed-line telecoms, broadband and pay-television services, where it competes with Sky, the immediate owner of Sky News. 

Mike Fries, Liberty Global’s vice-chairman, president and chief executive, said last year that it and Telefonica “would not be excited about funding a 7 million-home expansion “on our own,” meaning putting up all the equity capital with no line of sight to either third-party financing and/or wholesale. 

“On the other hand, I would add that there is quite a bit of infrastructure money searching for deals like this,” he highlighted. 

“There are industrial partners in-country who might be interested in something like that,” he noted. 

In addition, the new company will be owned separately to Virgin Media O2’s existing fibre network, which is aiming to upgrade the 15.5 million premises it serves. 

Unlike Virgin Media O2’s existing network the future entity is planned to be open access, with the option available for other broadband providers to also use the network.  

Vodafone and Sky are regarded as kingmakers in the market as they will decide whether to sign capacity deals with either BT Openreach or Virgin Media O2.