Nexfibre buys Substantial in GBP £2 billion fibre deal

InfraVia, Liberty Global and Telefónica have agreed to buy Substantial Group, owner of fibre network operator Netomnia and retail broadband provider YouFibre, in a GBP £2 billion deal through their joint venture nexfibre.

The transaction implies GBP £3.5 billion of long-term investment, tied to nexfibre's projected capital expenditure. It also includes wholesale and operational arrangements with Virgin Media O2, which is co-owned by Liberty Global and Telefónica.

Founded in 2019, Substantial Group is owned by Advencap, DigitalBridge and Soho Square Capital. It is positioned as the UK's second-largest alternative fibre provider and is expected to have more than 3.4 million fibre premises and more than 500,000 customers at completion.

Network Scale

The deal combines nexfibre's footprint with Netomnia's fibre network and a programme to upgrade parts of Virgin Media O2's existing access network. The combined platform is expected to have a full-fibre footprint of around 8 million premises by the end of 2027.

Taking Virgin Media O2's own growing fibre footprint into account, the parties project combined coverage of 20 million premises across the UK.

Nexfibre is a wholesale-only network provider and says its network currently covers more than 2.6 million premises across the UK. Virgin Media O2 serves as an anchor tenant on the platform.

Funding Package

The acquisition will be funded through new equity and arrangements with Virgin Media O2. InfraVia, Liberty Global and Telefónica will commit GBP £1 billion of new net funding to nexfibre, including GBP £850 million from InfraVia and GBP £150 million jointly from Liberty Global and Telefónica.

Virgin Media O2 has committed wholesale traffic to 4.6 million homes that overlap with or sit adjacent to the Netomnia footprint. In return, it is set to receive around GBP £1.1 billion in cash and an indirect 15% stake in nexfibre. Most of the proceeds are expected to be available for deleveraging, with GBP £150 million earmarked to finance the purchase of Substantial Group's customer base.

Retail Separation

The transaction includes a planned separation of Substantial Group's retail operations from the wholesale network. Nexfibre plans to sell the retail business, including the YouFibre and Brsk brands, to Virgin Media O2 for GBP £150 million.

Jeremy Chelot, Group CEO of Substantial Group, said:

"This landmark transaction with nexfibre represents the 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. 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."

The structure keeps nexfibre focused on wholesale fibre build and access, while Virgin Media O2 consolidates the acquired retail customer base. Nexfibre is acquiring Substantial Group for an enterprise value of GBP £2 billion, including a network of around 3 million premises and a current customer base of around 450,000.

Wholesale Commitments

Nexfibre will fund a fibre upgrade of 2.1 million Virgin Media O2 homes that currently use a hybrid fibre-coaxial network and sit adjacent to the Netomnia footprint. Virgin Media O2 will pay wholesale fibre access fees for customers in those homes as fibre becomes available, with most upgraded premises expected to be ready by the end of 2027.

Virgin Media O2 will also pay wholesale fibre access fees to customers in 2.5 million homes where its footprint overlaps with the Netomnia fibre network. Those payments are expected to start at completion.

Nexfibre will rely on Virgin Media O2 for managed services, including construction, in exchange for management and construction fees. This model provides nexfibre with an established operational base as it expands its wholesale footprint.

Market Positioning

The buyers described the acquisition as strengthening competition in the UK fixed access market. In a joint statement, InfraVia founder and CEO Vincent Levita, Liberty Global chairman and CEO Mike Fries, and Telefónica chairman and CEO Marc Murtra said: "By bringing our strengths together, we 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 £3.5 billion 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. We are committed to accelerating full-fibre coverage and helping ensure the UK remains competitive and ready for the future."

Rajiv Datta, CEO of nexfibre, said: "This transaction creates the largest alternative fibre platform in the UK, establishing the foundation for much-needed altnet consolidation and sustainable wholesale competition. It will help drive innovation and deliver the economic and societal benefits that full fibre connectivity makes possible."

The companies expect the deal to be completed in Q3 2026, subject to regulatory approvals.