Telefónica, Liberty Global lead JV to build new UK fibre network | Infrastructure | News | Rapid TV News
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The temperature has just been raised further in the current gigabit fibre broadband hotbed of the UK with Liberty Global, Telefónica and InfraVia Capital Partners announcing an agreement to set up a new joint venture (JV) that will roll out fibre-to-the-home (FTTH) to greenfield premises across the country.
Virgin Media O2 gigabit network 7Sep2021
Liberty Global and Telefónica-owned Virgin Media O2 (VMO2) will be the anchor wholesale client of the joint venture which will initially roll out fibre to 5 million homes not currently served by VMO2’s network by 2026, with the opportunity to expand to approximately two million more homes. Liberty Global and Telefónica will jointly hold a 50% stake in the JV through a holding company, with InfraVia owning the remaining 50%. Telefónica Group’s participation will be held through Telefónica Infra (its infrastructure unit).

Coupled with its own fibre investments to upgrade its existing 16 million premises network, the move will expand Virgin Media O2’s gigabit footprint to around 80% of the UK upon completion. In addition, the JV will seek to attract additional third-party wholesale clients. The company will target homes across the UK, both adjacent to the existing Virgin Media O2 footprint and new areas.

The business plan for the initial rollout of 5 million homes envisages an investment of approximately £4.5 billion, which includes investments related to the roll-out, envisaged connection capex and other related set-up costs. The three partners will fund their pro rata share of equity funding for the build, up to £1.4 billion in aggregate, phased over 4-5 years. In addition, the JV has obtained £3.3 billion of fully underwritten debt financing from a consortium of financing banks, including a £3.1 billion capex facility. As part of the transaction, InfraVia will make certain payments to Liberty Global and Telefónica, a portion of which will be linked to the progression of the network build-out.

“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. 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,” remarked Telefónica José María Alvarez-Pallete, chairman and CEO. “Further to our [recent announcement], Telefónica Infra is now able to add the UK to its list of countries with these mentioned FTTP vehicles, with InfraVia joining the top tier institutions partnered with Telefónica’s operating units in relevant markets such as UK, Spain, Germany or Brazil.”

Added InfraVia Capital Partners CEO and founder Vincent Levita: “We are excited to be partnering with VMO2, Liberty Global and Telefónica...The combination of our respective expertise in fibre network deployment, financing and operations in the UK, together with VMO2’s industrial scale and network construction know-how will be key to creating the undisputed second national fibre network in the UK providing access to broadband connectivity to millions of UK households…Attracted by the long-term trends of ever-increasing data usage and increased need for home connectivity, this would represent our fifth investment in fibre network deployment in Europe through strategic partnerships..”

The JV launch came just after VMO2 reported a second quarter of 2022 showing the return of growth in profitability and revenue rises with the company’s gigabit network expansion build programme, Project Lightning, increasing to 114,000 premises, up from 101,000 premises added in Q1 2022 and 89,000 premises added in Q2 2021. However, collectively, Liberty Global reported a Q2 showing marked losses in terms of revenue, profits and customers.