VMO2 prepares to spin off fixed network business


Virgin Media O2 (VMO2) says that the new fibre wholesaler will establish the “biggest dedicated fixed network challenger in the country” and could prove a focal point for altnet consolidation

VMO2 is preparing to spin off its fixed broadband network into a fully owned wholesale subsidiary NetCo.

The move will open up VMO2’s broadband networks, which currently provide cable and fibre broadband services to 16 million homes, to wholesale for the first time, giving ISPs looking for scale an additional option beyond Openreach.

VMO2 is also currently in the process of upgrading this entire footprint to fibre-to-the-home (FTTH), a process which will continue under the new NetCo.

The new NetCo will not include VMO2’s mobile assets or any other business units. Nexfibre, the joint venture between Liberty Global, Telefónica and Infravia, will notably remain a separate entity from the new NetCo.

When combined, nexfibre and NetCo currently have a full fibre footprint of just over 4 million premises, a total that will increase to 23 million homes once both companies have completed their respective builds.

“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,” explained VMO2 CEO Lutz Schüler.

He noted that the new wholesale platform could become a platform consolidation at a time when the UK’s vibrant altnet ecosystem is facing an almost existential financial crisis as a result of inflation and the macroeconomic environment.

“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.”

This announcement comes as part of a wider restructuring from the company’s joint owner Liberty Global, which is currently seeking to better monetise its telecoms assets throughout Europe. Liberty says it has plans to list its Swiss operator business Sunrise later this year and will seek to do likewise with its Belgian operator Telenet and its stake in Dutch joint venture Vodafone Ziggo.

“I think it sends a message and a signal to the market that (..) this is going to be a big strategic reorientation of our investment focus,” said Liberty Global’s Chief Executive Mike Fries.

What does this spinoff mean for the UK’s broadband landscape? Join the operators in discussion at this year’s Connected North conference live in Manchester

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