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VMO2 owners make Substantial acquisition to gain altnet broadband business

Acquisition of UK’s second-largest altnet by broadband major claimed to be able to unlock value of £3.5bn, creating sustainable, scaled network competition and wholesale choice in the UK

Joe O’Halloran
By
Published: 18 Feb 2026 16:45

InfraVia, Liberty Global and Telefónica have announced an agreement to acquire Substantial Group, owner of alternative fibre provider (altnet) Netomnia.

Founded in 2019 and owned by investors Advencap, DigitalBridge and Soho Square Capital, Substantial Group is expected to have more than 3.4 million fibre premises and over 500,000 customers by completion. Substantial Group’s fibre network, Netomnia, is regarded as the UK’s fourth-largest full-fibre network and second-largest UK altnet.

Netomnia undertook a merger with fellow altnets YouFibre and Brsk in the summer of 2024, and the company ended 2024 with 2.08 million premises serviceable, adding 1.27 million in the year in which it made an acquisition that added 255,000 in the final quarter. It had 238,000 premises connected in the 12-month period, representing 171,000 in a year and 48,000 in Q4 2024. Together with YouFibre and Brsk, Netomnia has had a target to reach five million UK premises serviceable by the end of 2027.

The acquisition will be made by the parties’ joint venture company, Nexfibre, and is claimed as being the key to unlocking £3.5bn of investment in the UK market to create a scaled, financially secure challenger to BT Openreach, with a full-fibre footprint of around eight million premises by the end of 2027. The value is a calculation based on projected Nexfibre capex spend between 2026-40 as a result of the transaction.

Even though the footprint of the UK’s altnets has grown strongly over the past two years, analysts have warned for some time that companies in the sector were facing increased commercial pressure that could result in a consolidation wave.

Indeed, commenting on the deal, Substantial Group CEO Jeremy Chelot said the “landmark” transaction with Nexfibre represented a natural evolution of the UK’s fibre market.

“Consolidation has been inevitable, and this deal creates the scaled, sustainable platform needed to drive genuine wholesale competition,” he said. “Importantly, our retail brand, YouFibre, will remain post-close, ensuring our customers continue to receive the same trusted service they know today, while benefiting from the financial strength and infrastructure scale this combination delivers. This is about building a stronger future for UK fibre.”

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When combined with the fibre footprint of Virgin Media O2 (VMO2), co-owned by Liberty Global and Telefónica, the two networks will collectively reach 20 million premises and, says the three companies engaging in the acquisition, give internet service providers “a highly attractive wholesale alternative to the incumbent”.

Infravia, Liberty Global and Telefónica are committing £1bn in new net funding for Nexfibre to fund the transaction – made up of £850m from Infravia and £150m jointly from Liberty Global and Telefónica, with VMO2 committing traffic on 4.6 million overlapping and adjacent homes.

Key functional elements of the deal will see Nexfibre acquiring Netomnia’s current base of around three million premises and the Substantial Group total customer base of approximately 450,000 customers, expected to rise to over 3.4 million premises and more than 500,000 customers by closing for an enterprise value of £2bn.

After completion of the transaction – subject to customary regulatory approvals and expected by Q3 2026 – Nexfibre will sell Substantial Group’s retail business, including the YouFibre and Brsk brands, to VMO2 for £150m.

Nexfibre will also finance the fibre upgrade of the 2.1 million VMO2 hybrid fibre coaxial homes that are adjacent to the Netomnia footprint, with VMO2 paying wholesale fibre access fees on its customers in those homes as the fibre becomes available. The majority of these are expected to be ready by the end of 2027.

VMO2 will pay wholesale fibre access fees on its customers in the 2.5 million VMO2 homes that overlap the Netomnia fibre footprint, to begin at closing. 

In exchange for wholesale traffic commitment on the 4.6 million premises, VMO2 will receive around £1.1bn in cash and an indirect 15% stake in Nexfibre. The partners say that the “vast majority” of the proceeds will be available for deleveraging and the £150m to finance the purchase of Substantial Group’s 500,000 customer base. VMO2 will provide its full suite of managed services to Nexfibre – including construction – in return for ongoing management and construction fees.

Joint statement

In a joint statement commenting on the deal, Vincent Levita, founder and CEO at InfraVia Capital Partners; Mike Fries, chairman and CEO at Liberty Global; and Marc Murtra, chairman and CEO at Telefónica, said that by bringing their strengths together, they are creating a scaled and financially secure wholesale fibre challenger to BT Openreach; one that will enhance competition, strengthen the UK’s digital infrastructure, and deliver greater choice and quality for consumers and businesses.

“This transaction unlocks £3.5bn in international investment and reflects our shared confidence in the UK as a highly attractive market for long-term investment, supported by the government’s economic policies,” the statement added. “We are committed to accelerating full-fibre coverage and helping ensure the UK remains competitive and ready for the future.” 

However, news of the deal has alarmed rival firms in the UK broadband arena. CityFibre CEO Simon Holden warned that the deal risks re-establishing what he regarded as an “ineffective duopoly” of BT and VMO2 and undermining the significant progress of the UK broadband sector.

“There is an 80% overlap between [the deal’s] players and, if the deal goes ahead, it would significantly reduce competition and the choice available to consumers, as well as force hundreds of thousands of Netomnia customers back to VMO2,” he said. “Given the scale of this overlap, the [UK Competitions and Markets Authority] must thoroughly examine the deal.”

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