The UK broadband market could be set for a significant shake-up after Virgin Media O2 announced the creation of a new body aiming to take on BT Openreach.
The company says it is looking to provide "a major alternative" to Openreach, with a focus firmly on encouraging and strengthening fibre take up and rollout across the UK as it aims to offer, "the biggest dedicated fixed network challenger in the country".
The new arm of the business will be a fully consolidated subsidiary of Virgin Media O2, and be made up of its cable and fibre network assets. The company says this currently covers 16.2 million premises across the UK - all of which will now be upgraded to full fibre in the coming years.
Virgin Media O2 NetCo
Spearheaded by Virgin Media O2 and its shareholders Telefónica and Liberty Global, the move to create a dedicated fixed network business (or ‘NetCo’) is a major surprise, and a major statement of intent from Virgin Media O2.
BT Openreach has effectively acted as the backbone to the UK's telephone and broadband network for the past few years, maintaining and looking after infrastructure such as telephone cables, street cabinets and more.
Virgin Media O2 says its new offering will also be a platform for a range of potential altnet consolidation opportunities, alongside pursuing wholesale opportunities as a scaled network alternative, and providing optionality and flexibility for future in terms of financing.
However it will not involve any part of its mobile assets, which will remain separate, as will its nextfibre business arm, which boasts around four million premises as part of its push to get fibre into more greenfield areas.
There's no idea yet when the new business will officially launch, with Virgin Media O2 simply saying that plans have now been "initiated".
“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," said Lutz Schüler, CEO of Virgin Media O2.
"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.”
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