Original article ISPreview UK:
European telecoms giants Telefónica and Liberty Global, the joint owners of Virgin Media and O2 in the UK, have reportedly now joined with private equity firm InfraVia Capital to progress their previously proposed £2bn bid to buy alternative full fibre broadband network Netomnia toward conclusion. The deal is likely to offer the altnet more than rival CityFibre could muster, but competition issues could be raised.
Just to recap. Netomnia (Substantial Group) is one of the UK market’s largest altnets and has deployed their Fibre-to-the-Premises (FTTP) based broadband service to cover 3 million UK premises RFS (inc. 445,000 customers) – available across parts of 98 cities and towns. The group aims to cover 5m UK premises by the end of 2027 (inc. 1m customers by 2028).
NOTE: The Substantial Group is backed by over £1.6bn of equity and debt from investors Advencap, DigitalBridge, and Soho Square Capital etc.
By comparison, Virgin Media operates a gigabit-capable fixed line broadband network that covers over 16 million premises (mix of hybrid fibre coax and full fibre connections), although they’re aiming to upgrade all of that to full fibre (FTTP) by 2028.
In addition, Telefónica, Liberty Global and InfraVia Capital also jointly own the semi-separate nexfibre business, which has rolled out an open access (wholesale) full fibre network to 2.5 million premises in areas NOT currently served by Virgin Media’s own network. But at the time of writing, the only two retail ISPs selling services via nexfibre are all part of the same parentage (Virgin Media and giffgaff).
Back in October 2025 reports emerged that VMO2’s parents and CityFibre appeared to be battling over a major network consolidation deal to acquire Netomnia (here). According to today’s FT (paywall) report, VMO2 now appears to be leading with the most attractive offer (CityFibre may be more constrained on this front) and is allegedly close to signing a deal, although none of the parties involved have officially commented on this.
On the surface such a deal would not appear to make much sense, since quite a bit of Netomnia’s fibre has already overbuilt the combined nexfibre and VMO2 footprint (over half of Virgin Media’s gigabit network is overlapped by Netomnia, albeit less so on the nexfibre side). But the move, if confirmed, would also remove a major competitive player in the alternative network space and will, crucially, prevent CityFibre from securing its own merger with the operator and thus growing the scale it needs; this alone could be seen as a win for VMO2, albeit a potentially expensive one.
On the flip side, customers of Netomnia’s network, many of which will have used them to escape from legacy incumbents like Virgin Media and their cycle of inflation busting mid-contract price hikes, will probably be less than pleased about such a transaction and the future impact it may have upon their services.
Indeed, for consumers, a deal between Netomnia and CityFibre is likely to have been much more palatable. This due to the limited level of overbuild and shared position as lower cost broadband disruptors, which makes for a more competitive market. But if CityFibre can’t deliver the most attractive offer, then none of that matters.
The next big question mark remains over how the Competition and Markets Authority (CMA) would view such a deal, since it’s hard to imagine them treating the networks of Virgin Media and nexfibre as being truly separate, due to the shared parentage. The CMA is likely to consider the wider competitive ramifications of such a major operator buying into control of the altnet space like this, and you can bet CityFibre will raise a complaint.
This is all before we even consider the usual complexities and costs for VMO2/nexfibre when it comes to tackling any differences in network infrastructure, retail ISP relationships and technology. All of this could create issues for later network and customer base integration (e.g. what do they do about those areas of network overlap – discard them and migrate customers or discard their own network and migrate the other way).
However, it’s worth remembering that such deals aren’t unexpected in today’s market, particularly with so many altnets being under pressure from competition, rising build costs and high interest rates. Netomnia has been one of the few altnets to continue building through this phase of the market, seemingly with some success, but they’re not immune to the challenges.
As it stands, the FT’s wording appears to suggest that a deal is now all but signed, but nothing’s done until it’s done and that’ll be down to Netomnia’s decision in the next few days or weeks. What they decide may have a noticeable impact upon the wider competitive landscape and force CityFibre to focus on different, and possibly less attractive, consolidation targets; growing the scale they need thus may become harder.
