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Virgin Media O2 confirms plan for new fiber JV

Virgin Media O2 (VM O2) used the occasion of its annual results presentation to confirm that plans are afoot to create a new fiber venture that would build network coverage to an additional seven million homes.

VM O2 CEO Lutz Schüler said the Telefónica and Liberty Global joint venture now plans to "extend our footprint to ~23 million premises through a new fiber venture being set up by our shareholders."

Liberty Global CEO Mike Fries added that the two parent companies have "initiated discussions with a number of potential financial partners regarding an opportunity to participate in a new network build joint venture. The focus of the entity will be on building a full fiber network of up to 7 million premises in new greenfield areas by the end of 2027."

VM O2 aims to start deploying full fiber across its entire fixed network commencing later this year.
 (Source: Ascannio/Alamy Stock Photo)
VM O2 aims to start deploying full fiber across its entire fixed network commencing later this year.
(Source: Ascannio/Alamy Stock Photo)

Fries also noted that VM O2 will commit to being an anchor tenant of the new network, which will also be available to other ISPs on a wholesale basis and is expected to be built in areas that are currently only served by copper lines.

The announcement confirms speculation earlier in February that VM O2's parent companies Telefónica and Liberty Global were contacting potential investors with a view to setting up a joint venture that could accelerate the operator's fiber rollout plans in the UK and challenge the dominance of BT.

At the time, a Sky News report said informal talks with infrastructure funds began several weeks ago. The aim, reports said, is to sell a stake in a newly created corporate entity in order to secure external funding that could eventually total £1 billion (US$1.4 billion).

In December 2021, VM O2 said all 15.6 million homes passed by its existing HFC network had been upgraded to 1Gbps speeds. The company's Project Lightning network expansion has now also passed 2.7 million premises. VM O2 aims to start deploying full fiber across its entire fixed network commencing later this year, with completion in 2028.

In terms of mobile network expansion, VM O2 deployed 5G to over 2,000 sites in more than 300 towns and cities, and said it remains on-track for 50% 5G population coverage across the UK by 2023.

What a year

Schüler declared that last year was a "historic year for our business, which saw the completion of the UK's largest ever telecoms merger."

"We've started this year by being the only big four mobile network to not reintroduce EU roaming charges," he said. "This challenger spirit runs deep across the organization, and we have every intention of building on this energy and maintaining the momentum we've built up."

During 2021, the JV added 142,000 fixed customers, and now has a fixed-line base to 5.8 million. It also gained 344,000 contract mobile subscribers, taking the total mobile base to 42.2 million. It reported a 1.2% decline in "transaction adjusted" revenue to £10.4 billion ($14 billion), 2% growth in EBITDA to £3.7 billion ($5 billion), and invested £2 billion ($2.7 billion) in capex.

Guidance for 2022 is for mid-single-digit growth in pro forma, transaction-adjusted EBITDA, "supported by improved top-line growth and the delivery of synergies which will ramp through the year."

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— Anne Morris, contributing editor, special to Light Reading

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