Virgin Media O2, together with its shareholders Liberty Global and Telefónica, unveiled plans to create a distinct national fixed network company (NetCo) that will underpin full fibre take up and roll out across the UK. The goal is to establish the biggest dedicated fixed network challenger in the country, offering clear wholesale choice at scale for other providers as a major alternative to BT’s Openreach.
Key Highlights:
- NetCo, a fully consolidated subsidiary of Virgin Media O2, will have a neutral impact on the company’s leverage and credit structure.
- It will encompass Virgin Media O2’s cable and fibre network assets, currently covering 16.2 million premises across the UK, all of which will be upgraded to full fibre in the near future.
- Aligned with Virgin Media O2’s existing network strategy, NetCo will prioritize completing the ongoing fibre upgrade program, which involves overlaying the existing cable network with full fibre.
- The structure of NetCo allows for flexibility in terms of financing, potential altnet consolidation, and pursuing wholesale opportunities as a scaled network alternative.
- Virgin Media O2’s consumer and B2B units, along with its mobile network, will continue to serve millions of customers with evolving connectivity services.
- Through a wholesale agreement, NetCo will connect Virgin Media O2’s entire fixed customer base, generating revenue and cash flow from day one of operation. Virgin Media O2’s mobile assets will remain separate from NetCo, while nexfibre, an independent fibre joint venture, will continue expanding fibre networks into greenfield areas.
- Upon completion of all planned fibre builds, NetCo and nexfibre networks combined will reach up to 23 million homes, facilitating substantial fibre network competition covering around 75% of the UK.
- The development of NetCo is in progress, with teams from Virgin Media O2 and its shareholders actively involved.
- Further details and operational timelines will be disclosed in due course, subject to regulatory approvals.
Lutz Schüler, CEO of Virgin Media O2, said: “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. 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.”