Liberty Global, Telefónica, and InfraVia have grand designs on the UK fiber market
Britain's competition watchdog wants to cast a close eye over the proposed takeover of Substantial, owner of Netomnia, by a consortium that includes Virgin Media O2 owners Liberty Global and Telefónica.The Competition and Markets Authority (CMA) has referred the acquisition for an in-depth investigation under its fast-track procedure at the merging parties' request.It notified the parties earlier this week that it was launching an inquiry, and today's decision means it is fast-tracking the case to Phase 2 rather than conducting a full Phase 1 assessment.
The inspection will determine whether it would lead to a "substantial lessening of competition" in the market for fiber broadband networking.
The deal was announced in February, when Liberty Global, Telefónica, and InfraVia disclosed their intention to snap up Substantial Topco Limited (Substantial) in a transaction that valued it at £2 billion ($2.65 billion) through their existing joint venture company, nexfibre.Liberty Global and Telefónica are the joint owners of Virgin Media O2 and, together with InfraVia, joint owners of nexfibre.The trio said at the time they were looking to combine Substantial's fiber network concern (Netomnia) with nexfibre. Along with the 2.1 million premises served by Virgin Media O2, this would create a challenger to BT Openreach with a full fiber footprint of around 8 million premises by the end of 2027.The resulting entity would provide internet service providers with "a highly attractive wholesale alternative to the incumbent," the trio stated.The CMA will now test those claims against the possible loss of competition resulting from the consolidation, as it would reduce the number of fiber network operators and create a giant with the scale to take on BT, the UK's former state-owned telecoms monopoly.This is not the first time VMO2's owners have attempted such a move. Back in 2024, Virgin Media wanted to spin out its fixed-line broadband networks into a separate business (provisionally named NetCo) that would be open to other internet service providers for the first time. This proposal did not include nexfibre.But this ambition was canned last year amid an ongoing review at Telefónica that aimed to deal with the company's debt burden.To complicate matters, Liberty Global also has a 5 percent stake in another British telecoms operation, Vodafone, which it acquired three years ago, making for a tangled web of ownership in the UK comms market.
