Nexfibre Seals £2 Billion Netomnia Deal, Creating Britain’s Largest Independent Fibre Challenger to BT Openreach

Telefónica and Liberty Global, the joint owners of Virgin Media O2 (VMO2), have formally agreed to acquire Netomnia — the UK’s second-largest alternative fibre network operator — in a deal valuing Netomnia’s parent company, Substantial Group, at approximately £2 billion (€2.3 billion). The transaction is being executed through Nexfibre, the joint venture co-owned by Telefónica, Liberty Global, and private equity firm InfraVia Capital Partners, and marks one of the most consequential consolidation moves in the history of UK broadband infrastructure.

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A Deal That Reshapes the UK Fibre Landscape

The acquisition brings together two of the more credible independent fibre operators in Britain’s wholesale fibre market. Nexfibre currently covers approximately 2.4 million UK homes, while Netomnia’s network reaches around 3 million premises — predominantly in mid-sized towns and cities outside the largest urban centres. By combining the two networks alongside approximately 2.1 million Virgin Media O2 premises that Nexfibre will upgrade to full fibre, the combined entity is expected to reach a full-fibre footprint of around 8 million premises by the end of 2027. When factoring in the growing fibre footprint of VMO2 as a whole, the two networks will collectively cover approximately 20 million premises — providing internet service providers with what the companies describe as a highly attractive wholesale alternative to the incumbent.

For context, BT’s Openreach network spans more than 30 million homes, of which approximately 21 million are now full-fibre connections, underlining how significant an achievement a 20-million-premise combined reach would be for the newly enlarged platform.

Financial Structure and Investment Commitments

The funding mechanics of the deal are substantial. InfraVia, Liberty Global, and Telefónica are committing £1 billion in new net funding to Nexfibre to finance the acquisition. Of this, InfraVia is contributing approximately £850 million, while Telefónica and Liberty Global are jointly providing the remaining £150 million.

Virgin Media O2 also plays a meaningful role in the transaction’s economics. In exchange for committing wholesale traffic across 4.6 million overlapping and adjacent homes, VMO2 will receive approximately £1.1 billion in cash and an indirect 15% stake in Nexfibre. VMO2 will also take ownership of Netomnia’s existing customers and the YouFibre and Brsk retail brands.

At closing, the ownership structure of Nexfibre will be split broadly between InfraVia holding 50%, and Telefónica Infra, Liberty Global, and VMO2 jointly holding the remaining 50%. According to the official announcement from Liberty Global, the deal is expected to unlock £3.5 billion of international investment into the UK — a figure that reflects Nexfibre’s projected capital expenditure between 2026 and 2040 as a result of the transaction.

The transaction is subject to customary regulatory approvals and is expected to complete by Q3 2026. Liberty Global and Telefónica were advised by Barclays and LionTree, InfraVia by Morgan Stanley, and Nexfibre by TD Securities.

CityFibre Loses the Race

Goldman Sachs-backed CityFibre, the UK’s largest altnet with coverage of approximately 4.5 million homes, had positioned itself as both a potential acquirer of Netomnia and the natural consolidator of the UK fibre market. CityFibre had approached Netomnia with interest in a rival deal, but according to sources cited by the Financial Times, it was unable to match the Nexfibre-led bid — in part because any CityFibre offer would have leaned heavily on equity rather than cash, making it structurally less attractive to Netomnia’s investors.

Netomnia itself is backed by Advencap, DigitalBridge, and Soho Square Capital, all of whom will exit through this transaction. The Substantial Group — which encompasses Netomnia’s fibre infrastructure — had accumulated over £1.6 billion in equity and debt financing since its founding, reflecting the scale of ambition that went into building the network from scratch.

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Competition Concerns and the CMA Question

Not everyone in the industry has welcomed the deal. Simon Holden, CEO of CityFibre, raised pointed objections, noting that there is an approximately 80% overlap between the two players. He warned that the deal could significantly reduce competition and consumer choice, while potentially forcing hundreds of thousands of Netomnia customers back to VMO2. Holden called on the Competition and Markets Authority (CMA) to thoroughly examine the transaction, warning it risks re-establishing what he described as an ineffective duopoly between BT and VMO2 — reversing progress made in opening the UK broadband market to genuine competition.

Analyst Kester Mann, Director of Consumer and Connectivity at CCS Insight, took a more measured view, describing the deal as firing “the starting gun on an expected major shake-up of the UK broadband market as industry sentiment shifts from build to buy.” Mann acknowledged the significant network overlap but said further mergers and acquisitions are bound to follow as the struggling and indebted altnet sector comes to terms with rising costs, heavy competition, and slower-than-expected customer take-up.

Sebastien Lahtinen of thinkbroadband.com noted that while the geographic overlap is substantial — with around 2.5 million premises overlapping between Netomnia and VMO2’s gigabit network — Nexfibre is acquiring significant new footprint in other areas and effectively denying a key competitor the opportunity to absorb Netomnia into its own infrastructure.

The Altnet Consolidation Endgame

The Nexfibre-Netomnia deal arrives at a moment of deep structural stress across the UK’s alternative network sector. Rising construction costs, overlapping rollout footprints, and tighter credit conditions have squeezed smaller operators for the better part of two years. Several smaller altnets have already collapsed or been absorbed. G.Network changed hands and was placed into administration shortly thereafter. Hyperoptic shifted strategy entirely, contracting Openreach to help extend its footprint rather than continuing to build its own network.

Industry analysts at Assembly Research had long anticipated that 2026 would be a watershed year for UK altnet consolidation, with only the most efficient and well-capitalised operators surviving the shakeout. Research firm Intelligens Consulting found that altnets now account for around 57% of all UK fibre-to-the-premises deployments, with CityFibre, Netomnia, and Nexfibre anchoring the independent sector. Yet even as sector investment surged past £21.3 billion, the study flagged signs of slowing rollout momentum and take-up rates varying dramatically from 4% to nearly 50% across different operators.

AlixPartners, in an earlier analysis of the UK fibre market, identified refinancing pressure as a critical accelerant for consolidation — noting that 47% of UK fibre companies faced refinancing of significant debt and equity positions by 2026, forcing more realistic valuations and compressing the window for independent operations.

The Road Ahead: A Challenger to Openreach

The strategic logic behind the deal, as articulated by Nexfibre CEO Rajiv Datta, is to create the largest alternative fibre platform in the UK — one capable of providing sustainable wholesale competition to BT Openreach and driving genuine innovation in the market. For VMO2, the commercial dimension is equally compelling: VMO2 will pay wholesale fibre access fees on its customers within the 2.5 million VMO2 homes that overlap Netomnia’s footprint, beginning at the deal’s close.

Jeremy Chelot, Group CEO of Substantial Group, described the transaction as the natural evolution of the UK fibre market — one that creates the scaled, sustainable platform needed to drive genuine wholesale competition while keeping the YouFibre retail brand intact for existing customers.

The YouFibre brand, which was founded in 2019 and has grown to serve over 450,000 customers with full-fibre broadband packages starting from £24.99 per month, will remain operational post-close, ensuring continuity of service for current subscribers. VMO2 will also take on the Brsk brand as part of the customer and brand transfer.

For internet service providers operating in the UK wholesale fibre market, the deal signals a structural shift in the competitive landscape. A combined Nexfibre-Netomnia platform — with the financial backing of Telefónica, Liberty Global, and InfraVia, and a projected 8-million-premise footprint by 2027 — represents a genuinely scaled alternative to Openreach’s dominance. Whether that scale is sufficient to challenge Openreach’s 30-million-premise network remains to be seen, but the trajectory is unambiguous: Britain’s fibre broadband market is entering a new phase, one defined not by building new networks, but by consolidating the ones already built.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

2nd March, 2026