Virgin Media O2 is nearing a deal to use BT’s Openreach fibre network for new customers in uncovered areas, as the company pauses its own infrastructure upgrades to tackle its £22bn debt. The move is part of a broader cost-cutting drive, with VMO2 also shelving plans to expand its cable network. Jointly owned by Liberty Global and Telefónica, VMO2 has faced mounting pressure from investors due to fierce competition from alternative fibre providers, known as “altnets”.
Its bonds have fallen sharply, with some debt trading at 41 pence on the pound. The company currently serves 19mn homes, but only 9mn have fibre access. Plans to upgrade the rest have been abandoned as economically unviable.
VMO2 was also set to receive £1.1bn from a deal transferring 4.6mn homes to Nexfibre, but the UK’s competition watchdog has signalled it may block the £2bn transaction. Analysts say wholesaling via Openreach or altnets is logical given VMO2’s limited network coverage. Both BT and VMO2 declined to comment.
Source: Financial Times Companies · Summarized by HeadlinesBriefing