LONDON (Reuters) – Virgin Media-O2’s owners have opened talks with investors about building a new fibre network that could also be used by other smaller broadband providers, putting pressure on Britain’s market leader BT.
Spain’s Telefonica and Liberty Global were holding talks with pension funds and infrastructure investors to see if they would back a new fibre network covering around 7 million homes, a person familiar with the situation said on Monday.
BT’s Openreach is Britain’s leading broadband network that is used by both its retail customers and other broadband providers which use it on a wholesale basis, such as Comcast’s Sky, Vodafone and TalkTalk.
Virgin Media-O2 runs a cable network for its broadband and TV customers and has not previously offered wholesale access to rivals. Under the plan, a separate entity would provide a fibre network apart from Virgin’s existing network, the source said.
The news comes at a delicate time for BT, after the Franco-Israeli entrepreneur Patrick Drahi built an 18% stake in the former telecoms monopoly that is developing its own full-fibre network to 25 million homes by the end of 2026.
Investors have told Reuters that uncertainty over the returns BT can make from its fibre network, including whether wholesale partners Sky, Vodafone and TalkTalk will bring millions of customers to it, have weighed on the shares.
The stock was down 1% on Monday, giving BT a market value of 19 billion pounds ($25.5 billion).
The plan by Virgin Media O2’s owners is separate to an existing one to upgrade its network that serves 15.5 million premises to full fibre by 2028.
($1 = 0.7443 pounds)
(Reporting by Kate Holton; Editing by Alexander Smith)
