Virgin Media O2 Mulls Fibre Network Expansion With New Venture – Report

Virgin Media O2 is reportedly planning a joint venture with their respective owner organisations, as it seeks to build out a fibre broadband network in the UK to take on BT Openreach.

Virgin Media and O2 teamed up in 2020, when Virgin’s owner (American cable giant Liberty Global), agreed to a joint venture with O2 UK (owned by Telefónica).

That 50-50 joint venture combines Virgin Media’s broadband, TV, mobile and landline services with the mobile operations of O2.

Fibre joint venture

At the weekend, the Financial Times has reported Virgin Media O2 plans to launch a fibre-building joint venture with respective owners Telefónica and Liberty Global.

The idea is that Telefónica and Liberty Global will begin contacting potential investors this week, but some informal discussions have already begun, a person familiar with the matter told the FT.

In December 2021 Virgin Media O2 said it had completed a major speed upgrade of its network, with 15.5 million homes now able to access download speeds of 1.1Gbps, which is 22 times faster than the national average of 54 Mbps.

It should be noted Virgin Media’s network currently covers roughly 53 percent of UK homes, as its network reach tends to be more centred around towns and cities, and not in more rural locations or villages.

However, what makes this FT report interesting, is that this new Virgin Media O2 venture is aiming to build out a new full-fibre network that will provide connectivity to an additional 7 million homes, primarily in areas that currently only use copper lines and which are only served by BT (i.e. more rural locations).

According to the FT, the new venture will be separate from the existing Virgin Media O2’s network as the future Virgin Media O2 network is planned to be open access, with the option available for other Internet Service Providers (Sky, Vodafone etc) to also use the network.

The new Virgin Media O2 venture would likely utilise the existing ducting and telephone poles owned by BT, rather than engaging in expensive civil works (digging up roads etc).

However this is not confirmed at this time.

BT Openreach

BT of course is the former UK telecom incumbent, and Openreach has spent the past decade having to carry out extensive civil works to upgrade the UK’s legacy copper-based network to a partial or full fibre offering, which covers almost all of the UK.

BT is spending £15bn to build out a full fibre network, and in May last year it revealed it would expand its build out of Fibre to the Premise (FTTP) by 5 million premises, with the new target of 25 million premises to be reached by December 2026.

It is estimated that the United Kingdom has approximately 28.1 million households in total.