Virgin Media O2 (VMO2), the 50-50 joint venture between Telefónica and Liberty Global in the UK, is negotiating to buy an alternative fiber optic network for CityFibre for £3,000m (€3,400m), according to the filings. The telegraph. The information indicates that Liberty Global CEO Mike Fries and his CityFibre counterpart Greg Misch have already been in “preliminary discussions” to launch an acquisition bid. The CityFibre purchase will greatly accelerate VMO2’s plan to expand its fiber footprint. Currently, about 14.3 out of the 16.1 million homes and buildings through which fixed VMO2 networks pass are connected by cable (hybrid coaxial fibre, or HFC). In the summer of 2021, the subsidiary announced a plan to convert its entire network from cable to optical fiber (FTTH).
Buying CityFibre, which has more than 2m fiber-connected homes in excess, and has an investment plan of £4,900m underway to take it to 8m by 2025, would boost that target significantly, despite the cost of increasing debt. VMO2 recently indicated that it has achieved its 2022 fiber deployment target of 519,000 homes.
CityFibre is owned by a consortium of funds led by Goldman Sachs, which acquired this wholesale operator in 2108 for £750m. Its fiber network competes with Openreach, that of former state monopoly BT, and Virgin Media’s O2 network.
In contrast to Spain, where at least five national operators (Telefónica, Orange, Vodafone, MásMovil and Digi) have their own fiber optic network, a technology already owned by almost 70% of homes, and which is expected to cover 100% by 2025, UK Fiber deployment is long overdue.
This is why fiber broadband is one of the UK funds’ long-term commitments. Alternative network Netomnia has just announced that it has secured £230m debt financing from a consortium of six banks (HSBC UK, ING, NIBC, RBC, Standard Chartered and UKIB) for its plan to expand its network to 1 million homes.
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