Virgin Media O2 (VMO2) is reportedly planning a fibre network joint venture, led by its owners Liberty Global and Telefonica
According to reports, Telefonica and Liberty Global have entered into discussions to raise millions of pounds to fund the rollout of fibre across the UK.
The new build would seek to connect up to seven million additional homes with fibre-to-the-home (FTTH) technology, with homes targeted in areas outside of VMO2’s core operating areas.
According to one source, the new network would operate on a wholesale basis, being made available for use by other operators for a fee. Naturally, VMO2 would be an anchor tenant of the new network.
Informal discussions with investors have already begun, with one source suggested that the funds sought could be up to £1 billion.
This decision should not come as a huge surprise. Rolling out FTTP is expensive, with Liberty Global’s CEO Mike Fries saying last year that the company “would not be excited about funding 7 million-home expansion” on its own and could instead seek funding from third parties.
This news also arrives at a highly dynamic time for the UK broadband market, which has become a hive of investment activity over the last six months, partly as a result of favourable regulatory changes. Late last year, the UK’s third largest fibre operator, CityFibre, notably raised £1 billion in funding to further its own rollout. Meanwhile, Openreach last week announced its latest fibre rollout investments, extending their FTTP network to cover parts of Yorkshire, Humber, County Durham, the East Midlands, and Scotland.
Until recently, VMO2 was busy upgrading its existing network to DOCSIS 3.1 technology, announcing in December that it had finished the upgrade four years ahead of schedule. As a result, all 15.5 million premises covered by VMO2 broadband services now have access to gigabit-capable speeds.
This upgrade undoubtedly gives VMO2 the title of ‘the country’s largest gigabit provider’, but it should be remembered that when it comes to FTTP itself, it still lags significantly behind its rival BT.
At the end of last year, VMO2 said it had passed 1.2 million premises with FTTP, with current plans to target 7 million homes in the next five years. This contrasts with BT, which has already covered around 6 million properties with the technology and plans to spend £15 billion to increase that figure to 25 million homes by 2025.
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