Giving a considerable financial fillip to the infrastructure firm’s ambition to roll out an XGS-PON gigabit broadband network to five million homes and businesses across the UK by 2026, UK Infrastructure Bank is to make a £250m debt investment in full-fibre network provider Nexfibre, and act as the cornerstone lender in the broadband roll-out project.
Nexfibre is the result of a £4.5bn investment from Virgin Media O2 (VMO2) shareholders, Liberty Global and Telefónica, alongside investment firm InfraVia Capital Partners, and its launch is designed to create the UK’s first national-scale challenger to BT Openreach, boosting choice and competition in the market. Nexfibre will initially roll out fibre to five million homes not currently served by Virgin Media O2’s network by 2026, with the opportunity to expand to an additional two million homes.
Less than two weeks ago, the company announced that after initiating trials of the XGS-PON optical networking technology on its live full-fibre infrastructure towards the end of 2022, VMO2 had become its anchor tenant, and was now starting to sell commercial services over the Nexfibre infrastructure in addition to its own network, which supports download speeds of 1.1 Gbps.
XGS-PON fibre connections can provide customers with symmetrical upload and download speeds of up to 10 Gbps, supporting future technologies and applications.
Explaining the reasons for lighting up the new network, VMO2 said it was simply reacting to what it described as a huge increase in customers’ demand for data. It stressed that with customers using more and more data each year – and with so many breakthroughs happening in the technology space, from the metaverse and generative artificial intelligence (AI) to mixed reality applications and immersive gaming – total data use on its network increased by more than 10% in 2022, and demand was only going in one direction.
Nexfibre’s full-fibre network is projected to cover five million UK homes and businesses by 2026, with the option of reaching a total of seven million homes beyond that. VMO2 aims to have a fibre footprint reaching 80% of the UK when coupled with its own fibre upgrade plans, which complete in 2028.
The investment is part of what UK Infrastructure Bank said is its commitment to investing in infrastructure that tackles climate change and boosts regional and local growth. The bank is a cornerstone lender in the project, which is backed by total investment of £4.5bn in its initial phase.
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- Virgin Media O2 switches on XGS-PON network through Nexfibre: Leading UK operator takes leap forward with full-fibre optical network promising upload and downloads of up to 10Gbps to cover five million homes by 2026.
- UK altnets hit fibre accelerator: Fast-growing broadband infrastructure provider passes more than 500,000 homes and businesses as part of XGS-PON full-fibre network roll-out.
The joint venture, created by InfraVia Capital Partners, Liberty Global and Telefónica, has already committed £1.4bn in equity to the project, and the deal also includes more than £3bn in debt raised from further private investors, with the UK Infrastructure Bank’s £250m debt investment helping to underpin what is the second-largest debt raise seen in the UK digital market to date.
The bank’s loan is targeted towards locations which have to date had poorer digital connectivity or historically lower productivity. The investment is expected to help boost growth in these areas and reduce existing inequalities in accessing vital digital services.