NetCo will underpin full fibre take up and rollout, as well as provide new financing optionality and a platform for altnet consolidations.
The entity, which will be a fully consolidated subsidiary of VMO2, will comprise the operator’s cable and fibre network assets covering 16.2 million premises across the UK.
Aligned with VMO2’s current network strategy, NetCo will focus on completing the company’s ongoing fibre upgrade programme which involves the existing cable network being overlayed with full fibre.
VMO2’s consumer and B2B units, and its mobile network will continue to serve millions of customers with a range of connectivity services. Through a wholesale agreement, NetCo will connect VMO2’s fixed customer base, providing revenue and attractive cash flow from day one of operation.
Virgin Media O2’s mobile assets will not form part of the NetCo, and nexfibre, the independent fibre joint venture between its shareholders Liberty Global and Telefónica, and Infravia, will continue to operate separately, focusing on fibre network expansion into greenfield areas.
Once all planned fibre build is completed, the NetCo and nexfibre networks will reach a combined total of up to 23 million homes, which will see clear fibre network competition at scale in the UK reaching around 75 per cent of the country. Collectively, VMO2 and nexfibre have a full fibre footprint of more than 4 million premises.
The development of NetCo is underway between teams at VMO2 and Telefónica and Liberty Global.
Lutz Schüler, CEO of Virgin Media O2, said, “This is a logical evolution of our fibre strategy that creates a clear, focused and scaled network entity within the Virgin Media O2 family which underpins our shift to a fully fibre network and reinforces our position as the leading challenger to Openreach in the market.
“Working closely with our shareholders, this network business will provide a platform for potential altnet consolidation and wholesale opportunities in future, offering widescale network choice for other providers, as well as giving financing optionality. While nothing changes today work is well underway and you’ll hear more from us later in the year.”