Virgin Media scraps wholesale network rival to Openreach
- Reference: 1754049670
- News link: https://www.theregister.co.uk/2025/08/01/virgin_media_ditches_plans_for/
- Source link:
Last year, Virgin Media O2 (VMO2) [1]disclosed plans to form a national fixed network operator (NetCo), backed by its shareholders Liberty Global (owner of VM) and Telefónica (owner of O2).
NetCo – a placeholder name – was to be formed as a subsidiary of VMO2 and take over the company's cable and fiber network assets. VMO2 would then serve its existing broadband users by becoming a paying customer of NetCo, which was expected to be free to sign up other ISPs as well.
[2]
However, the strategy is no more thanks to an ongoing review at Telefónica which aims to deal with the company's debt burden – said to be [3]hindering the company's ambitions for growth .
[4]
[5]
When asked about progress on NetCo during the company's recent Q2 2025 earnings call for investors, Telefónica chief exec Marc Murtra said: "The UK NetCo is not paused there and it's not part of the strategic review. That is a decision we made and announced and that has to do with our industrial strategy and industrial way of working."
That was a somewhat ambiguous answer. Murtra was subsequently asked by [6]Reuters for clarification and confirmed: "The project is stopped."
[7]BT chief says AI could deliver more job cuts, hints at Openreach sell-off
[8]Need for speed? CityFibre punts 5.5 Gbps symmetrical broadband at ISPs
[9]UK's smaller broadband operators face tough road ahead, consolidation possible
[10]Altnets told to stop digging and start stuffing fiber through abandoned pipes
We asked VMO2 and Telefónica for comment. The latter had yet to answer at the time of publication, while VMO2 told us it disclosed that the NetCo process was paused and being reviewed during its Q1 results in May, and it was for shareholders to decide whether that process continues or not.
Preparations to create the new UK national NetCo operator were understood to be on track and proceeding to plan earlier this year, before Murtra was installed as Telefónica CEO and announced the strategic review.
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To confuse matters further, VMO2 was also linked with another network operator, [12]nexfibre , a separate joint venture between its shareholders Liberty Global, Telefónica, and private equity house Infravia, via which VMO2 serves some broadband customers.
VMO2 announced its Q2 results for the quarter ended June 30 this week, declaring revenue of £2.175 billion, a decrease of 0.4 percent compared with the same period last year. This excludes handset revenue and the impact of nexfibre construction, it said.
"Regardless of NetCo we are continuing to deploy fiber at scale, have a fiber footprint of more than 7 million premises today and a total fixed network reach of 18.5 million premises – all of which can access speeds of 1 Gbps and above," a VMO2 spokesperson told us. ®
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[1] https://www.theregister.com/2024/02/19/virgin_media_product_to_rival_openreach/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aIzklTAeBIxAZGLNCQRCewAAAFE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://www.bloomberg.com/news/articles/2025-05-29/telefonica-chairman-s-m-a-ambitions-face-old-debt-challenges
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIzklTAeBIxAZGLNCQRCewAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aIzklTAeBIxAZGLNCQRCewAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://www.reuters.com/business/media-telecom/virgin-media-o2s-plan-spin-off-infrastructure-is-scrapped-telefonica-ceo-says-2025-07-30/
[7] https://www.theregister.com/2025/06/16/bt_chief_says_ai_could_cut_more_staff/
[8] https://www.theregister.com/2025/06/04/cityfibre_55_gbps/
[9] https://www.theregister.com/2025/05/02/uk_small_broadband_operators/
[10] https://www.theregister.com/2025/03/03/altnet_abandoned_pipes/
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIzklTAeBIxAZGLNCQRCewAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://www.nexfibre.co.uk/
[13] https://whitepapers.theregister.com/
That's a shame from a technical viewpoint. It would've been interesting to see how they managed sharing network capacity. Either their wholesale customers would've given up in disgust or else perhaps we'd have seen non-VM CPs offering higher average throughput and lower/more consistent latency than VM on 'their own' network.
It would also have been interesting to see how it affected the overall market.
Oh well.
Presumably it'll come back again. You know the tech and the industry history so I can skip that bit, but it's all very well for Telefonica to mutter about the debt problem, that doesn't make it go away. In ROCE terms, VMO2 are destroying shareholder value. Either the Christmas Fairy comes along and hands over a few billion to reduce the $21 billion of VM debt, or some of the creditors/parent companies take a heavy haircut (unlikely), or VMO2 have to find some growth. The existing business has only seen fixed line customer numbers bounce between 5.7 and 5.8m, they've failed to achieve real terms pricing or margin increases. They've sold down other assets like Cornerstone, the VM brand seems unable to grow (perhaps too many ex-customers like me who will never come back), which really only leaves the hope of wholesale growth to make better use of the network.
Or perhaps the hope is that, just as Telefonica were mugs for merging with the debt laden, ex-growth hulk of VM, they now hope that some greater mug can be found, eg a large US media outfit daft enough to want to own a distribution network.
Perhaps it's been canned precisely because they don't have the backhaul capacity that prospective customers (other ISPs) were demanding?
Possible, but I guess unlikely. Much as I loathe the company, they did invest a lot in upgrading their network, and the backhaul was very, very rarely a problem when I spent time as a superuser in their help forums. Where capacity constraints existed these were 99% of the time on the DOCSIS circuits, usually at the CMTS (the big mega-modem that sat at the head of the essentially analogue cable distribution). I suspect but don't know that VM's network architecture people were very good and really understood their network, and because they were always thinking ahead to the next speed ramp-up to stay ahead of Openreach, they were always mindful of the capacity of each element. Their main problem has always been that DOCSIS had a best-before date some years ago, but VM were putting off the evil day of going FTTP, so they had to stick with the old co-ax technology on the local circuits. I believe they're now part way through changing to FTTP, but whether that's being rolled out to the entire network and existing customers in any credible timescale I don't know - as announced, they were going to put in fibre capability for each local network, but only going to put in FTTP links for new customers, or those upgrading their contract, so existing customers......yeah alright, I'm boring myself, and I'll STFU
AndrueC probably has a much better knowledge of all these matters?
FTTP rollout
Will this slow their FTTP roll out I wonder.
I am increasingly of the opinion that the only way to ensure I can get a decent, reliable connection is to buy several technologies and use them together in a redundant manner.
As far as I'm concerned "BT" and anything involved with it is one single point of failure.
I have an expensive Draytek router that can do Ethernet, VDSL2, and 5G directly. That gives me all kinds of options because, clearly, there isn't going to be any regulation in any one area of Internet connectivity for a long time to come (and it's already been too long).
I thought that scrapping traditional voice service would be it, but apparently not. I'm now with an ISP who couldn't give me a voice service (I don't care, never use it) except VoIP and the line only does DSL. But it appears that any kind of competition / regulation just isn't going to happen in this area. So I have 5G and if Starlink wasn't Musk-borne I might have that too (I'm in the perfect area for it with stupendous clear-sky access). I'll just have to wait for Kuiper, I suspect.
But this week there was hope. Gigaclear are running FTTP lines into my road and down my road (but I don't know if they will come as far as my house, even though it's a tiny road). That'll be a good "third option" if I can get FTTP.
Ironically, I now have better connection in the middle of nowhere surrounded by fields, in an AONB and SSO, miles from anything than I did when I lived inside a major town that you will have heard of, inside the M25, a stone's throw from the town centre. If Gigaclear comes in too... that could be a 1Gb line direct to my door. And given the constant power cuts in the area because it's so rural, that might well be the last to fall over in my area.
It's just pathetic how any kind of regulation, market management, etc. that's been posited for decades is just overtaken by actually just waiting for something new to come along entirely. We could have all had FTTP decades ago, but we're apparently too scared to just nationalise OpenReach and make it do its job.
Well, isn't that a shocker.....
Its not like anyone has been suspecting this would be the outcome from day one or anything is it?
Still it makes that nasty business of SMP go away (again) doesn't it.....