Virgin Media O2 Proposes £2B Acquisition of Netomnia via Nexfibre
Deal Overview
Parties to the transaction: Virgin Media O2, via its infrastructure joint venture Nexfibre, acquiring the fibre infrastructure assets of Netomnia, part of Substantial Group.
Total transaction value:Approximately £2 billion
Public announcement date: 18 February 2026
The proposed acquisition of Netomnia’s fibre network by Nexfibre will expand the operational footprint of Virgin Media O2 (VMO2) and represents part of a broader wave of consolidation sweeping the UK fibre broadband sector. Over the past decade, the UK has seen rapid deployment of full-fibre infrastructure as part of a national effort to expand gigabit-speed connectivity. By late 2024, nearly 70% of UK households had access to full-fibre broadband.
While much of this expansion has been driven by incumbent infrastructure operators, Openreach (BT’s network arm) and VMO2 (via Nexfibre), numerous smaller ‘alternative network’ (altnet) providers have also laid millions of fibre lines. The pace of network construction, however, has led to overlapping infrastructure deployments and financial pressures on smaller operators, pushing the sector into a phase of consolidation. This acquisition represents a significant example of this emerging trend within the UK telecommunications infrastructure market.
Against this backdrop, VMO2’s owners, Liberty Global and Telefonica, through the private equity firm InfraVia Capital Partners, have announced the proposed purchase of Netomnia, a wholesale fibre network operator, through its parent entity, Substantial Group. Valued at approximately £2 billion, the proposed deal consolidates networks covering more than 6 million premises and includes a £3.5 billion commitment for infrastructure investment over the next 14 years. The transaction reflects the complex balance between strategic growth, market consolidation, and regulatory oversight.
Acquirer: Nexfibre (Virgin Media O2’s owners)
Nexfibre is a full-fibre wholesale network provider operating across the UK. As of 31 December 2025, the company’s network passed over 2.6 million premises using XGS-PON infrastructure, a next-generation fibre technology capable of delivering multi-gigabit broadband speeds.
Established as a joint venture between InfraVia Capital Partners and the shareholders of Virgin Media (Liberty Global and Telefonica), Nexfibre seeks to expand VMO2’s fibre infrastructure while maintaining a separate wholesale platform for multiple internet service providers. Its strategic objective is to build, operate, and commercialise a large-scale fibre-to-the-home (FTTH) network targeting up to 7 million homes. Combined with VMO2’s existing broadband infrastructure, this supports ambitions to reach approximately 23 million premises nationwide. The venture aims to establish a credible large-scale alternative to Openreach, the subsidiary of British Telecom and historically the dominant provider of UK broadband infrastructure.
Nexfibre’s establishment reflects broader trends in the UK broadband market. The UK has among the highest levels of data consumption per broadband subscriber in Europe, and full-fibre (FFTH) coverage has grown rapidly in recent years. Nexfibre was created to support large-scale FTTH deployment and provide a robust wholesale fibre option for multiple service providers, meeting strong demand for ultra-fast broadband from both residential and business users.
VMO2 itself is a major UK telecommunications provider, combining a fibre-rich broadband network with mobile services. The company serves approximately 49 million UK connections across broadband, TV, home and mobile. Its fixed network currently passes 16.2 million premises, offering gigabit-speed broadband and high-performance Wi-Fi. On the mobile network side, VMO2 operates over 99% of the nation’s population with 4G and provides 5G services in more than 600 towns and cities. The company is owned through a 50:50 joint venture between Liberty Global and Telefonica SA and was formed in 2021 through a £31 billion merger between Virgin Media and O2.
Target: Netomnia (Substantial Group)
Netomnia is a wholesale fibre operator and the UK’s fourth-largest full-fibre network. As of December 2025, it has deployed over 35,000 km of fibre across more than 100 towns and cities, serving over 3 million premises and a customer base of around 450,000.
Owned by Substantial Group, founded in 2019, Netomnia also operates retail brands including YouFibre and Brsk. It positions itself as a customer-focused altnet, targeting areas where larger incumbents have not prioritised fibre deployment.
The combination of Nexfibre, Substantial Group’s fibre network Netomnia and the Virgin Media O2 customers on premises, over 2.6 million, is expected to create a scaled challenge to BT Openreach, with a projected FTTH footprint of around 8 million premises by 2027. When combined with VMO2’s wider network, total coverage could extend to around 20 million premises, offering internet service providers a wholesale alternative to the incumbent.
The Acquisition
The proposed transaction involves Nexfibre acquiring Substantial Group, which comprises the Netomnia network. The combined customer base is expected to exceed 500,000, with the network footprint projected to expand to over 3.4 million premises.
As part of the deal, Nexfibre will sell Substantial Group’s retail operations, including the YouFibre and Brsk brands, to VMO2 for £150 million and finance the fibre upgrade of approximately 2.1 million VMO2 hybrid fibre-coaxial (HFC) homes. In consideration of the traffic commitment across 4.6 million premises, VMO2 would receive £1.1 billion in cash and an indirect 15% stake in Nexfibre.
The majority of the proceeds are expected to be applied towards deleveraging and financing the purchase of Substantial Group’s customer base. Beyond infrastructure ownership, VMO2 will also provide Nexfibre with a range of managed services, including network construction, in exchange for ongoing management. The completion of the transaction remains subject to regulatory approvals and is expected in the third quarter of 2026.
For Nexfibre, this acquisition represents operational efficiency as it accelerates fibre deployment and minimises capital expenditure by avoiding duplicative builds. It also provides access to a ready-made wholesale and retail network, providing appealing options to independent service providers. For Substantial Group, the deal ensures Netomnia’s network assets are integrated into a financially secure platform capable of large-scale expansion, mitigating risks associated with debt. It would be an exit strategy for Netomnia in areas facing incumbent FTTP competition and particularly diminish capital waste from parallel network builds. For VMO2, acquiring Netomnia’s retail brands and customer base further enhances market expansion and strengthens its position as the primary challenger to its competitor Openreach in the UK broadband market.
Legal Contentions and Regulatory Impact
As mentioned earlier, the UK’s rollout of full-fibre broadband is approaching maturity, with the sector increasingly defined by consolidation. Fibre lines have been overlapped with numerous networks vying for customers in the same areas, leading to great competition. As sub-scale operators seek lifelines, mergers of altnets have become more commonplace to combine rather than risk failure, including the merger of altnets FullFibre and Zzoomm, the tie-up of Netomnia and Brsk and Virgin Media O2’s acquisition of smaller rival Upp.
Overbuilding of multiple fibre networks in the same locations has, however, become common in lucrative towns and suburbs, intensifying the already fierce competition and creating a fragmented patchwork of networks, various of which remain underused.
Despite extensive new fibres being built, customer acquisition has proved challenging. In late 2024, BT’s Openreach and Virgin Media O2 had together lost a record number of broadband subscribers to the altnets- specifically over 200,000 in a single quarter. Yet this only translated to about 3% annualised growth on the incumbents’ huge base. As standalone businesses become harder to sustain, this merger represents another attempt at consolidation by one of the largest network owners in its nationwide ambitions and access to capital.
Against this backdrop, contenders such as CityFibre have raised concerns that the transaction could reduce competition. They warn that there is an 80% overlap between BT Openreach and VMO2 and that if the deal went ahead, it would reduce the choices available to consumers and force numerous Netomnia customers back to VMO2. This is unlike arguments that mitigation of overbuilding, acceleration of full-fibre deployment and reduction of duplicated capital expenditure would enhance efficiency and, overall, have a modest impact on national competition.
Given the potential overlap, the Competition and Markets Authority would therefore need to conduct a complex assessment of market concentration. The merged entity is expected to control networks serving over 6 million premises, second only to Openreach. As a result, the CMA may require remedies such as wholesale access commitments and could potentially mandate that Virgin Media O2 open its consumer network to rival internet providers, similar to conditions imposed on other major operators. Wholesale access is a key feature of telecommunications infrastructure markets, where network owners typically sell access to multiple service providers, allowing consumers to choose among different broadband providers even when a single company owns the underlying physical network. Whether Nexfibre intends to provide open wholesale access to all service providers or prioritise affiliated companies such as Virgin Media O2 will be a critical factor in the CMA’s assessment.
Additionally, the impact on customers remains uncertain. If Netomnia’s customers are transferred over to VMO2 pricing structures, concerns over reduced choice or potential pricing changes could draw regulatory attention and public scrutiny. Any efficiency gains from network consolidation would need to be weighed against possible reductions in consumer welfare. Factors such as whether this transaction could substantially lessen competition, lead to higher retail prices, limit consumer choice, or reduce investment in network innovation will all play a part in this regulatory decision-making.
Impact on Transaction Value
Regulatory scrutiny introduces uncertainty into the transaction and may affect the transaction’s financial value. If the CMA determines the merger raises significant competition concerns, it may require remedies such as restrictions on pricing practices, maintaining wholesale access for independent internet service providers, or withdrawing from certain network assets in areas where overlap is particularly high. While such conditions would not necessarily hinder the proceedings of the transaction, they could reduce some of the anticipated synergies associated with the merger.
Deal Implications
The regulatory outcome of the proposed transaction will likely influence the future trajectory of consolidation within the UK fibre sector. If approved with minimal conditions, it may encourage further mergers among alternative network providers seeking to achieve greater scale and financial sustainability.
Conversely, if regulators impose significant conditions or block the transaction, particularly in light of localised competition concerns such as in the North West, where the network overlap is estimated at approximately 37% and would reduce competition for the largest number of households, smaller operators may be encouraged to pursue alternative strategies, including infrastructure sharing arrangements, strategic partnerships or joint ventures.
Industry Impact
The acquisition reflects a growing consolidation trend within a fragmented alternative network landscape. In the short-term, consumers may benefit from expanded fibre deployment, as people would now have a choice of broadband providers and faster gigabit speeds at competitive prices.
In certain areas where network overbuild has actualised, a household may have access to multiple infrastructure providers, including services delivered by BT Openreach, Virgin Media O2, and one or more local fibre ISPs. This competitive environment has driven promotional offers, faster broadband speeds for consumers, and improved service offerings.
Despite this, consolidation raises a fear of loss of choice over a potential reduction in the number of distinct infrastructure networks. This does not necessarily harm retail internet competition. In fact, the deal could enhance the wholesale market, providing independent ISPs with access to a more extensive network. A useful comparison can be drawn with the wholesale-only model adopted by CityFibre, where dozens of ISPs compete to deliver services over the single underlying network of CityFibre’s line.
The key regulatory consideration will therefore be whether consolidation risks an overly concentrated market structure or ‘duopoly’. Competition authorities are likely to remain focused on ensuring at least one strong independent fibre operator could challenge the incumbents. Therefore, while consumer choice in high-overlap areas may decrease slightly, it is thought nationwide competition would remain supported by the presence of other alternative networks and major retail providers like Sky and TalkTalk.
House View
The proposed acquisition of Netomnia by Nexfibre underscores a fundamental shift in the UK fibre market: scale is increasingly essential to sustain long-term infrastructure investment as investors and operators. The success of the combined Nexfibre-Netomnia platform will depend on its ability to integrate networks efficiently and realise the operational and financial benefits associated with greater scale.
If successfully executed, the deal may strengthen Virgin Media O2’s long-term market positioning by supporting its full-fibre rollout ambitions while retaining Netomnia’s retail brands, operational synergies, and committed capital investments, supporting its integration objectives. The combined platform is intended to establish a scaled and financially secure wholesale fibre competitor to BT Openreach, potentially expanding infrastructure choice for end users and internet service providers. It would set a precedent for further alt-net consolidation as smaller competitors continue facing strategic pressure, increasing the likelihood of further mergers.
For policymakers and regulators, the central challenge will be in ensuring this wave of consolidation within the fibre market continues to support customer choice, innovation, and sustained infrastructure investment, rather than weakening competition within the market.
The regulatory outcome will be closely watched, as it may influence future consolidation among alternative network providers while shaping competitive dynamics of the UK telecommunications market.
References
Alex Wright, ‘Virgin Media O2 owners acquire Netomnia’ CommsBusiness (18 February 2026) https://www.commsbusiness.co.uk/content/news/virgin-media-o2-owners-acquire-netomnia
Andrew Wooden, ‘Nexfibre puts Openreach in its sights with £2 billion Netomnia purchase’ Telecoms.com (18 February 2026) https://www.telecoms.com/fibre/nexfibre-puts-openreach-in-its-sights-with-2-billion-netomnia-purchase
Ben Butler, ‘Telecoms business behind Netomnia fibre network to be acquired in £2bn deal’ (Insider Media, 18 February 2026) https://www.insidermedia.com/news/national/business-behind-netomnia-fibre-network-to-be-acquired-in-2bn-deal
Craig Hale, ‘Virgin Media O2 owners seal £2bn Netomnia deal in major UK fibre network consolidation’ TechRadar (3 February 2026) https://www.techradar.com/pro/virgin-media-o2-owners-seal-gbp2bn-netomnia-deal-in-major-uk-fibre-network-consolidation
‘Deep Dive: Netomnia x Virgin Media –vs– CityFibre’ (ThinkBroadband, 13 November 2025) https://www.thinkbroadband.com/news/deep-dive-netomnia-x-virgin-media-vs-cityfibre
FTTH Council Europe, ‘Netomnia Ltd’ (Members Directory) https://www.ftthcouncil.eu/membership/members-directory/1265/netomnia-ltd
InfraVia Capital, ‘Nexfibre’ (Companies) https://infraviacapital.com/companies/nexfibre/
Jolanta Stanke, ‘Nexfibre Acquisition of Netomnia: Market Implications’ (Point Topic, 4 February 2026) https://www.point-topic.com/post/nexfibre-acquisition-of-netomnia-market-implications
Julian Glover, ‘Telecom Giants Complete £2bn Netomnia Takeover in Shake‑up of UK Fibre Market’ BroadbandProvider (5 March 2026) https://broadbandprovider.co.uk/telecom-giants-complete-2bn-netomnia-takeover-in-shake-up-of-uk-fibre-market/
Kieran Smith, ‘Virgin Media O2 owners to seal £2bn acquisition of UK broadband rival’ (Financial Times, 3 February 2026)
Liberty Global, ‘InfraVia, Liberty Global and Telefónica acquire Substantial Group for £2 billion through their existing joint venture, Nexfibre’ (Liberty Global, 18 February 2026) https://www.libertyglobal.com/liberty-global-substantial-group-nexfibre/
Liberty Global, ‘Virgin Media O2 in the UK’ (Liberty Global) https://www.libertyglobal.com/operations/telecom/virgin-media-o2-in-the-uk/
Reuters, ‘Virgin Media O2 owners to buy British fibre firm Substantial for $2.7 billion’ (18 February 2026)
Telefónica, ‘Liberty Global and Telefónica to merge their U.K. operations creating the leading fixed‑mobile provider in the country’ (Press release, 7 May 2020) https://www.telefonica.com/en/communication-room/press-room/liberty-global-and-telefonica-to-merge-their-u-k-operations-creating-the-leading-fixed-mobile-provider-in-the-country/
Umayr Loan, David Lennox and Ben Fewtrell, ‘Home Stretch for UK Fibre: Navigating the Consolidation Wave’ (KPMG UK, June 2025)
‘Virgin Media O2’s Owners Buy into UK Fiber Builder Netomnia’ (Finimize, 19 February 2026) https://finimize.com/content/virgin-media-o2s-owners-buy-into-uk-fiber-builder-netomnia