Virgin Media O2’s parent companies have sealed a £2 billion acquisition of fibre network operator Netomnia, creating a new wholesale broadband giant that will challenge BT Openreach’s dominance across Britain.
The deal, announced today, sees InfraVia, Liberty Global and Telefónica take control of Netomnia through their joint venture nexfibre. The acquisition brings together networks covering more than 6 million premises and promises £3.5 billion in fresh infrastructure investment over the next 14 years.
Jeremy Chelot, chief executive of Netomnia’s parent company Substantial Group, described the transaction as “the natural evolution of the UK’s fibre market” during a press briefing this morning.
Market Consolidation Accelerates
Netomnia operates full-fibre networks reaching 3 million homes and businesses, with 460,000 active customers. The company sells broadband through retail brands including YouFibre and Brsk, competing directly with established players like BT and Virgin Media.
“Consolidation has been inevitable,” Chelot explained. “This deal creates the scaled, sustainable platform needed to drive genuine wholesale competition.”
The acquisition follows months of intense bidding between Virgin Media’s owners and rival network operator CityFibre, which had been seeking its own merger with Netomnia to challenge the market’s established players.
CityFibre Threatens Competition Challenge
CityFibre boss Simon Holden immediately criticised the deal, warning of an “80 percent overlap” between the merging networks that could reduce consumer choice.
“If the deal goes ahead, it would significantly reduce competition and force hundreds of thousands of Netomnia customers back to VMO2,” Holden said in a statement released this afternoon.
The company confirmed it is preparing a formal complaint to the Competition and Markets Authority, arguing the merger risks creating an “ineffective duopoly” between BT and Virgin Media O2.
Complex Financial Structure Emerges
Under the deal’s terms, nexfibre will pay £2 billion for Netomnia but immediately sell the company’s retail operations, including YouFibre and Brsk brands, to Virgin Media O2 for £150 million.
Virgin Media O2 will receive approximately £1.1 billion in cash plus a 15% stake in the enlarged nexfibre business. The payments stem from wholesale traffic commitments covering 4.6 million premises where Virgin Media customers will access nexfibre’s network.
Sarah Mitchell, a YouFibre customer from Manchester, expressed concern about the ownership change. “I switched to YouFibre specifically to get away from Virgin’s price increases,” she said. “Now they’re basically the same company again.”
Network Upgrade Plans Accelerate
The merger will fast-track Virgin Media’s transition from hybrid fibre-coax cables to full-fibre connections across 2.1 million properties adjacent to Netomnia’s existing network.
Nexfibre expects the majority of these upgrades to complete by late 2027, representing investment of roughly £100 per premise. The company currently operates separate full-fibre networks covering 2.5 million homes in areas without existing Virgin Media infrastructure.
“We are creating a scaled and financially secure wholesale fibre challenger to BT Openreach,” said joint statement from the three acquiring companies’ leaders Vincent Levita of InfraVia, Mike Fries of Liberty Global, and Marc Murtra of Telefónica.
Government Backing Strengthens Case
Lord Stockwood, UK Minister for Investment, welcomed the transaction as evidence of international confidence in Britain’s digital infrastructure sector.
“This major investment supports thousands of jobs and puts more money in people’s pockets,” Stockwood said in a government statement released this morning. “The announcement will help deliver real benefits across the UK, creating new fibre networks for up to two million premises.”
The government’s endorsement could influence regulators reviewing the deal, particularly given recent CMA approval of other major telecom mergers including the Three UK-Vodafone combination.
Regulatory Scrutiny Expected
Competition authorities face a complex assessment of market concentration in Britain’s rapidly evolving broadband sector. The merged entity will control networks serving over 6 million premises, second only to BT Openreach’s national infrastructure.
Industry analysts suggest the CMA may demand wholesale access commitments similar to those imposed on other major operators, potentially requiring Virgin Media to open its consumer network to rival internet providers.
David Thompson, a telecommunications consultant based in London, noted the deal’s strategic implications. “This removes a fast-growing competitor while preventing CityFibre from achieving the scale needed to properly challenge the incumbents,” he said.
Customer Impact Remains Unclear
Netomnia retail customers attracted by competitive pricing and service quality face uncertainty about future offerings under Virgin Media O2 ownership, despite promises to maintain existing brands and services.
James Robertson, a Brsk customer from Birmingham, questioned the long-term outlook. “Virgin has a reputation for mid-contract price hikes that prompted me to switch away originally,” he said. “I’m worried those practices might creep back in.”
The companies committed to preserving YouFibre’s operations and customer service standards, adopting an approach similar to Virgin Media’s handling of the giffgaff mobile brand after previous acquisitions.
Transaction completion requires standard regulatory approvals and is scheduled for the third quarter of 2026, after which the complex process of network integration will begin across millions of premises nationwide.
