Virgin Media O2 seeks joint venture for UK full-fibre extension

In December 2021, Virgin Media O2 announced that it had completed work to offer gigabit connectivity to all of its 15 million UK customers, and as it announced its yearly results, the joint-venture company’s parents, Liberty Global and Telefónica, have begun talks to extend such capability to greenfield sites.

The December upgrade was described by the operator at the time as the UK’s fastest-ever national gigabit roll-out, confirming Virgin Media O2 as the UK’s largest gigabit provider, more than twice the size of its nearest competitor. The company was singled out in a report by the UK parliamentary Public Accounts Committee in January 2022 showing that that the proportion of premises in the UK with access to gigabit broadband leapt from 40% to 57% between May and October 2021, largely because of Virgin Media O2 upgrading its cable network.

Now Liberty Global and Telefónica have revealed that they have initiated discussions with a number of potential financial partners about an opportunity to participate in a new network build joint venture. The entity will be focused on building a full-fibre network of up to seven million premises in new greenfield areas by the end of 2027.

Virgin Media O2 will commit to being an anchor tenant of this new network, and network will also be available to other ISPs on a wholesale basis. If realised, this will extend the company’s gigabit reach to about 23 million premises.

As it was announcing the network expansion, Virgin Media O2 released results showing that it continued to grow its customer based in both the quarter ended 31 December 2021 and the fiscal year, with continued strong demand for premium connectivity and broadband speed. Fixed net adds totalled 142,000 in 2021, with 53,000 in Q4. This represented a seventh consecutive quarter of growth in both Project Lightning areas and the existing footprint.

Broadband net adds were 177,000 in 2021, of which 60,000 were delivered in Q4, representing an estimated 57% of UK broadband net additions in the quarter across the incumbent and Virgin Media O2’s fixed networks. This performance was said to have reflected the continued demand for faster broadband speeds, with an average speed of 214Mbps across the company’s broadband base at the end of Q4 – more than 4x faster than the national average.

The company also grew its small office and home office (SOHO) customer base by 38% in 2021. It generated revenues of $317.7m in the fourth quarter and $1.01bn for the year.

Virgin Media O2 CEO Lutz Schüler,said: “In a historic year for our business, which saw the completion of the UK’s largest-ever telecoms merger, we stayed focused and finished 2021 on a high. We saw sustained subscriber growth across fixed and mobile as the demand for fast, reliable connectivity remains, and delivered an increase in profitability while investing more than £2bn in our network, services and future growth drivers.

“As part of our mission to upgrade the UK, we expanded our 5G coverage, completed our gigabit roll-out as promised, and we now plan to extend our footprint to [around] 23 million premises through a new fibre venture being set up by our shareholders.

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