The move will see nextfibre’s footprint expanded by around 175,000 premises in the East of England
Today, nexfibre has announced that it will acquire UK altnet Upp in a deal facilitated by its partner Virgin Media O2 (VMO2).
The financial details of the deal were not revealed, but the partners said the transaction would be all-cash, with VMO2 making the initial purchase and carrying out integration of Upp’s network, before selling it on to nexfibre once integration is complete. VMO2 suggests that this process should take around a year.
Founded in 2021, Upp quickly secured £1 billion in finding from investment firm LetterOne to rollout a fibre broadband network in the East of England. The rollout was initially targeted to cover 50 towns, spanning roughly 300,000 homes, by 2022.
However, the rollout has been slower than predicted, with Upp’s network live in just 24 towns, covering, according to today’s announcement, around 175,000 homes. These homes will now be added to nexfibre’s own growing footprint, with the companies noting that there is currently minimal overlap between their existing networks.
nexfibre is a relative newcomer to the UK’s wholesale fibre scene. Created last summer as a joint venture by VMO2’s owners Liberty Global and French investment firm InfraVia Capital Partners, the company has ambitions of cover up to 7 million UK premises with fibre, 5 million of which it hopes to achieve by 2026. Liberty and InfraVia Capital say they will invest around £4.5 billion into the business to facilitate this rapid rollout.
In terms of the East of England, nexfibre noted that the acquisition of Upp will actually increase the fibre investment in the region, with the company pledging to invest £350 million to pass over 500,000 additional homes with full fibre by 2026.
“Our acquisition of Upp’s network assets represents an important step as we continue to build a world class fibre network along with our wholesale partner Virgin Media O2. At nexfibre, we are on a mission to build and expand our network in suburban and semi-rural areas, closing the digital divide and boosting local economies. Upp is a high-quality regional fibre network in the East of England and will accelerate our rollout in an area where we expect to invest more than £350 million by 2026,” said Andrea Salvato, Chairman of nexfibre.
This deal arguably marks the first major altnet acquisition by another network operator in the UK, a market that has seen the launch of over a hundred independent fibre providers in recent years. More recently, however, funding has begun to dry up, leading many to suggest that market consolidation on a massive scale is inevitable.
Indeed, for Matthew Howett, Founder & CEO of Assembly Research, the acquisition of Upp could be seen as the “first domino to fall” in a coming cascade of market consolidation.
“Today’s announcement could well be the first domino to fall in terms of an altnet being bought by one of the big players. The UK broadband market is set to enter an era of scaled connectivity challengers, after first a period of dominance from the incumbent followed by a proliferation of altnets,” commented Howett. “Altnets are a key piece of the connectivity jigsaw, but consolidation has been inevitable as new sources of funding dry up, focus on take-up intensifies and investors increasingly demand returns.”
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