Virgin Media Seeking Investment to Expand Footprint by 7m Homes

Virgin Media O2 (VMO2) is seeking investors to back an expanded full-fibre build, as the race to lay ultrafast broadband lines across the UK heats up.

VMO2’s primary shareholders Liberty Global and Telefónica have been holding conversations with infrastructure funds in recent weeks, with the intention of selling a stake in the newly-merged firm to fund full-fibre builds, Sky News reported over the weekend.

Virgin Media currently delivers full-fibre broadband to around 1.2 million premises. Last summer it announced its intention to replace its entire cable network, covering 14.3 million premises, with faster, symmetrical full-fibre by the end of 2028. 

VMO2 has also previously spoken of a future “ambition” of expanding that full-fibre network to reach an extra seven million homes in areas of the country it currently doesn’t reach. 

An expanded full-fibre build would help it vie with BT’s Openreach, which is planning to spend £15 billion to bring full fibre to 25 million premises by the end of 2026. Meanwhile, billions of pounds are supporting full-fibre builds by around 50 alternative companies, including Hyperoptic, Gigaclear, and CityFibre.

Last year, Mike Fries, chief executive of Liberty Global, said his firm and Telefónica, "would not be excited” about funding a network expansion “on our own.” This suggested VMO2 would either seek third-party financing or wholesale deals.

Now VMO2 has started the search for those backers. According to Sky, VMO2 is seeking “hundreds of millions of pounds” of investment, with one source suggesting external capital injection could eventually total as much as £1 billion.

Additionally, unlike VMO2’s current network, the new build is expected to be open access, with the option of other broadband retailers reselling service on it, as BT’s Openreach allows. 

For several years Virgin Media has teased reinvention as a wholesale operator. In October, Sky was reportedly near a deal to partner with Virgin Media as a retail partner, although nothing concrete has emerged. TalkTalk and Vodafone have also been mooted as potential partners. Although they don't have their own broadband infrastructure, those companies may eventually become kingmakers in the full-fibre battle, as they decide between partnerships with BT Openreach and VMO2.