VMO2 fixed-line wholesale announcement is ‘direct challenge’ to BT

VMO2 fixed-line wholesale announcement is ‘direct challenge’ to BT

Virgin and O2 signage generic 16.9.jpg

Virgin Media O2’s (VMO2) plans to move into the fixed-line wholesale market by offering access to its fibre and cable networks to other providers “represents a direct challenge to BT’s Openreach unit”, according to Kester Mann, director of consumer and connectivity at CCS Insight.

News broke on Friday that VMO2, along with its shareholders Liberty Global and Telefonica had initiated plans to create a distinct national fixed network company (NetCo) that will underpin its full-fibre takeup and roll-out.

In a release, VMO2 said it would aim to provide new financing optionality and a platform for potential altnet consolidation opportunities, establish the biggest dedicated fixed network challenger in the country and offer a major alternative to BT’s Openreach.

The company’s mobile assets will not form part of the NetCo, and nexfibre, the independent joint fibre venture between Liberty Global, Telefonica and Infravia will continue to operate separately focusing on fibre network expansion into greenfield areas.

Mann believes the move should be considered a positive for UK broadband customers as it creates fresh opportunities for new and existing service providers and “long overdue competition” to Openreach.

“Creating a new network company with a dedicated team could enable Virgin Media O2 to pursue merger and acquisition opportunities in the fixed-line broadband market,” Mann told Capacity.

“With dozens of alternative providers, the UK is ripe for consolidation and such a move would bring Virgin Media O2 crucial scale benefits.

Mann thinks attention will now turn to which providers would consider signing up with the new entity, how it could be regulated and whether there will be any response from Openreach.

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