As it established its new brand in June 2021, Virgin Media O2 said it would continue the work carried out by Virgin Media in accelerating gigabit broadband throughout the UK. In its latest move, it has announced its intention to upgrade its fixed network to full fibre to the premises (FTTP), with completion in 2028.
In addition, the company said that the investment in the new network will bolster its long-term network strategy, fuel future connectivity innovation for consumers and businesses, and create options to potentially pursue the broadband wholesale market in the UK.
Even though it claims the fastest speeds at scale in the UK, Virgin Media O2 said it will upgrade the cable element of its fibre-rich network and make use of “cutting-edge” full-fibre technology that is capable of delivering symmetrical 10Gbps download and upload speeds, with the upgrade plan covering 14.3 million cable premises, after taking into account the operator’s existing 1.2 million FTTP homes.
The company will continue to maintain and develop its existing cable network during the upgrade period, which includes meeting its 2021 gigabit targets and utilising the network’s multigigabit capability to deliver speeds above 2Gbps in future. This, it said, will be achieved through the combination of DOCISIS 3.1 cable and FTTP technology over the coming years.
Virgin Media O2 is also guaranteeing that it will deliver speeds of 1.1Gbps across its entire network by the end of this year, meeting the UK government’s target to take connectivity at the speed to 85% of the UK population by 2025, four years ahead of schedule.
The company will also continue to expand its fibre footprint to new areas through its Project Lightning programme and is actively exploring further expansion opportunities to reach millions more premises, with discussions ongoing with strategic and financial partners.
Regarding finance, the programme is backed by Virgin Media O2’s shareholders, Liberty Global and Telefónica, and is described as value accretive decision. It was taken following recent deployment trials, a thorough analysis of alternative network scenarios and the potential opportunity to enter the fixed wholesale market.
The company also believes that by utilising its fully ducted network, the upgrade will be one of the UK’s most efficient fibre roll outs, costing around £100 per premises passed. Customer installation costs will be in addition to this, with installs operated on an on-demand basis as roll-out and revenue enhancement opportunities commence. According to the firm, this compares with approximately circa £60 per premises for an upgrade to a full DOCSIS 4 cable network, and it eliminates the need to invest in future versions of DOCSIS as the demand for faster speeds and capacity continue to rise.
Virgin Media O2 calculates that the total upgrade costs over the estimated seven-year life of the project will represent a modest annual increase to Virgin Media O2’s current capital expenditure budget of approximately £2bn per year. The company stressed that such expenditures do not adjust for any of the revenue benefits that are expected to accrue to Virgin Media O2’s consumer, enterprise and wholesale businesses from the FTTP upgrade.
“Our mission is to upgrade the UK, and we are doing exactly that. This major new fibre upgrade programme will see us begin the next evolution of our network, building on the investment, firepower and leadership we already have and ensuring we’re fibre fit for the future,” said Virgin Media O2 CEO Lutz Schüler.
“Right now, we have the UK’s leading gigabit network, and this upgrade means we’ll be even stronger for the decades ahead, pursuing new opportunities and putting words into action. In 60 days since the formation of Virgin Media O2, we have achieved a lot, but this is just the beginning. With strong foundations for growth in place, we will boost connectivity, provide greater choice and be a challenger the country can count on.”
As it was announcing the new fibre network, Virgin Media O2 reported its second quarter 2021 pro-forma financial results, the first set of financial posts since the business was formed on 1 June. These showed the company added 36,000 broadband subscribers in the second quarter, increased its fixed-line customer base to 5.7 million, and added almost a million mobile connections in the quarter when taking into account internet of things (IoT) SIMs and services provided to other operators, such as giffgaff and Sky Mobile, on the O2 network.
The company said the results highlighted its early convergence strength, with more than 40% of Virgin Media O2’s broadband customers also taking a mobile contract. The business’ fixed network has now been expanded by 2.5 million premises through Project Lightning, with 5G services reaching almost 200 locations and 4G capacity upgraded in 45,000 postcodes since the start of 2021.
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