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Liberty and Telefonica-led JV secures £4.5bn investment

MIke Fries Liberty Global_36bf7c.jpg

Liberty Global, Telefonica and InfraVia Capital Partners have formed a joint venture (JV) that will build a new fibre network in the UK via a £4.5 billion cash injection.

The JV will construct and operate a wholesale fibre-to-the-home (FTTH) broadband network of up to seven million homes and will not overlap with VMO2’s existing network.

Liberty Global and Telefonica will hold a 50% stake through a holding company, while InfraVia will own the remaining 50%.

In a joint statement, the companies revealed that VMO2 will act as the anchor client, entering into an agreement with the JV upon the closing of the transaction.

“This landmark agreement with Liberty Global, Telefonica and InfraVia will expand our FTTH footprint to millions of new UK homes, creating the undisputed second national fibre network in the UK,” Mike Fries, CEO and vice chairman of Liberty Global says.

“VMO2 has already committed to upgrading its entire existing 16 million footprint to FTTH.”

“This JV will take our aggregate FTTH footprint to up to 23 million homes, reaching around 80% of the UK. VMO2 will bring significant build expertise and will benefit from a meaningful off-net growth opportunity and as the anchor client will support attractive returns for the JV – a winning combination.

The new fibre network would challenge BT, which has long been the main wholesale network via its partnerships with the likes of TalkTalk and Sky.

BT itself is improving its fibre network with its pledge to offer fibre to 25 million homes by the end of 2026.

Lutz Schüler, CEO of VMO2 said that the multi-billion-pound investment was a “vote of confidence in Britain” that will boost its position as the biggest challenger on the market.

“Virgin Media O2 will play a crucial role by providing extensive build talent and expertise to the new venture, as well as being a major wholesale customer which fuels fantastic expansion economics from the get-go,” he added.

“Alongside our existing gigabit network, other operators will be presented with a sizeable and attractive wholesale opportunity that will enhance competition and choice like never before.”

The transaction between Liberty Global, Telefonica and InfraVia is expected to close in the fourth quarter of 2022.

The news comes hot on the heels of VMO2’s financial results, where it reported growth with revenues of £2.5 billion and a net profit of £78 million.

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