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Sky and Virgin Media further FTTH talks

UK regions network NEW.jpeg

Sky and Virgin Media executives are rumoured to have to met last week to further discuss a UK fibre broadband collaboration.

According to reports, Comcast owned Sky is interested in investing in a UK fibre-to-the-home (FTTH) joint venture with Liberty Global’s Virgin Media.

Historically Sky has brought wholesale broadband from BT’s Openreach, but now under Comcasts ownership, is reassessing its sole reliance on one supplier and so is looking at investing in fibre itself.

If the deal goes ahead, BT could lose close to £700 million in what Sky pays for wholesale network access, according to figures from UBS. It could also impact the premium that Openreach could charge for FTTH, lowering its future returns on the assets.

Comcast and Sky are said to be doubtful about the ability of alternative network providers like CityFibre, for example, to build a FTTH network in the face of increasing competition from Openreach and Virgin Media.  

The news follows a comment made by Fries in August 2019 where he expressed interest in expanding Virgin Media’s UK network. According to ISPreview, he said:

“So let’s just say that we are in the mix as we should be in any discussions about building the next wave of networks outside of where we already have built superfast broadband, we feel like our 15 million homes of 1Gbps ready, going to 10Gbps [in the future], is it for that footprint [Project Lighting].

But beyond that footprint, we’re going to be opportunistic to see if we can put capital to work off balance sheet without consolidating losses and activities. Potentially with partners, just to get Virgin possibly in the Virgin Media brand to a national scale, wouldn’t that be great, if Virgin was a national brand not a regional brand in half the marketplace.”

Last year, Sky entered into a strategic partnership with BUUK Infrastructure that will see the former given wholesale access to BUUKs full-fibre network across the UK. The deal is expected to open up significant new headroom for growth in the new-build segment of the residential market.

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