Netomnia runs the second biggest altnet and the fourth largest fibre broadband infrastructure in the UK – this is the biggest step yet towards consolidation in fixed networks
As reported earlier this month, nexfibre is to acquire the UK’s fourth largest altnet Netomnia (the firm’s log is above) through Nexfibre, the JV owned by InfraVia Capital Partners, Liberty Global and Telefónica. It is the second largest altnet after CityFibre. The deal values Netomnia’s parent, Substantial Group, at an enterprise value of about £2 billion (€2.29 billion). It is owned by investors Advencap, DigitalBridge and Soho Square Capital.
“The deal fires the starting gun on an expected major shake-up of the UK broadband market as industry sentiment shifts from build to buy,” comments Kester Mann, Director, Consumer and Connectivity at CCS Insight. “Further mergers and acquisitions are bound to follow as the struggling and indebted altnet sector comes to terms with rising costs, heavy competition, and slower-than-expected take-up.”
The transaction is seen as one the most significant steps yet in the long expected consolidation among the UK’s fibre broadband providers which will create the UK’s largest alternative full-fibre platform to BT’s Openreach.
Is the whole greater than the sum of the parts?
Netomnia has passed more than 3 million premises and serves 460,000 customers through its retail brand, YouFibre. Its network spans more than 100 towns and cities across the UK. The plan is that the combination of Netnomia’s base, plus premises passed by nexfibre and the more than 2 million upgraded Virgin Media O2 premises will total 8 million premises passed by the end of 2027.
When combined with Virgin Media O2’s wider fibre rollout, co-owned by Liberty Global and Telefónica, the two networks together will reach up to 20 million premises.
Simon Holden, CEO of CityFibre stated, “There is an 80% overlap between these two players and, if the deal goes ahead, it would significantly reduce competition and the choice available to consumers, as well as force hundreds of thousands of Netomnia customers back to VMO2. Given the scale of this overlap, the CMA must thoroughly examine the deal.”
Mann says there is “a significant network overlap that raises questions over the hefty £2 billion price tag agreed”.
A blow for or against competition?
According to Holden, “Competition has driven lower prices, faster speeds and better services and this deal risks re-establishing an ineffective duopoly of BT and VMO2 and undermining the significant progress the UK has made.”
The deal is expected to complete in Q3 of this year, subject to the customary regulatory approvals. Mann noted, “The merger could prompt some competition concerns as the gap widens between the UK’s two leading broadband infrastructure providers – Openreach and Virgin Media O2 – and the rest of the market.”
Jeremy Chelot, Group CEO, Netomnia and YouFibre, said, “This landmark transaction with nexfibre represents the natural evolution of the UK’s fibre market. Consolidation has been inevitable, and this deal creates the scaled, sustainable platform needed to drive genuine wholesale competition.
“Importantly, our retail brand, YouFibre, will remain post-close, ensuring our customers continue to receive the same trusted service they know today, while benefiting from the financial strength and infrastructure scale this combination delivers. This is about building a stronger future for UK fibre.”
As per the previous report, the buyers claim the transaction will unlock £3.5 billion of international investment into the UK.
