Virgin Media O2’s shareholders, Liberty Global and Telefónica, who co-own Virgin Media O2, will join with investment firm InfraVia Capital Partners to form a joint venture that will target a UK-wide fiber to the premises (FTTP) wholesale network. The collaborators will invest approximately £4.5 billion ($5.51 billion) in the venture, which will target up to 7 million premises passed with FTTP.
The deal to create the joint venture is expected to close in the fourth quarter of this year. Liberty Global and Telefónica together will own half of the entity via a holding company, with InfraVia Capital Partners (a fully owned unit of Telefónica Group) owning the rest. The collaborators will fund their pro rata share of equity funding for the build, up to £1.4 billion in aggregate, phased over four to five years. The joint venture also has acquired £3.3 billion ($4.04 billion) of fully underwritten debt financing from a consortium of financing banks.
The venture’s initial focus will be on 5 million homes not currently served by Virgin Media O2 (VMO2), which the partners hope to reach by 2026. Another approximately 2 million homes are on the roadmap as well. VMO2 will be a customer of the joint venture “from day one,” according to the announcement. The infrastructure will extend VMO2’s footprint to 23 million premises.
“This landmark agreement with Liberty Global, Telefonica, and InfraVia will expand our FTTH footprint to millions of new UK homes, creating the undisputed second national fiber network in the UK,” asserted Mike Fries, CEO and vice chairman of Liberty Global. “VMO2 has already committed to upgrading its entire existing 16 million footprint to FTTH. This JV will take our aggregate FTTH footprint to up to 23 million homes, reaching around 80% of the UK. VMO2 will bring significant build expertise and will benefit from a meaningful off-net growth opportunity and as the anchor client will support attractive returns for the JV – a winning combination. Finally, we are very excited to be working with InfraVia, who we already partner with in Germany, and welcome the expertise they bring to the JV.”
“Telefónica has a recent track record of successfully developing broadband connectivity in many markets through strategic partnerships. These deals help each country firmly increase their competitiveness and digital infrastructure to help their companies and economy thrive,” added José María Alvarez-Pallete, chairman and CEO of Telefónica. “The UK is, indeed, a growth market for us and we are very excited to be partnering with InfraVia to accelerate access to next-generation broadband connectivity to a larger number of UK households and adding to Telefónica Infra’s growing portfolio.”
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