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[Chrysalis]

https://dailybusinessgroup.co.uk/2023/03/virgin-media-02-ponders-3bn-bid-for-cityfibre/

Virgin Media O2 (VMO2) is said to be pondering a £3 billion takeover bid for rival broadband provider Cityfibre.

Mike Fries, chief executive of VMO2 parent company Liberty Global, has held initial talks with his Cityfibre counterpart Greg Mesch, according to sources.

Cityfibre is making progress in building its reach from two million to eight million properties by 2025. About half of Cityfibre’s network overlaps with VMO2 which is jointly owned by Liberty Global and Telefonica.

VMO2 Is believed to working with bankers at US-based LionTree, according to The Telegraph.

It is said that inflation is raising the cost of expanding broadband networks more expensive and making it harder to compete with BT’s Openreach.

Cityfibre, which has been active in Scotland and provides services to telecoms providers including Vodafone and TalkTalk, raised £4.9bn in debt financing last summer.

However, it lost almost £50m in 2021 and is shedding up to 400 jobs – a fifth of its workforce – as it seeks to control costs.

[Chrysalis]

Kind of surprised me as CF seemed the most well funded and the biggest altnet, but also does make sense as VM have plans to cover their existing footprint with FTTP, and CF like VM concentrate on cities.

I dont consider this good news personally as my city CF looks set to have a monopoly for huge parts of it with VM been its only competitor a few years later, this would give VM ultrafast monopoly for about 3/4 of my city.

[Black Sheep]

I genuinely thought CF would be one of the few Alt-nets that would be left standing, as a stand-alone company. 

Like you say, it must make sense to the bean-counters somewhere.

[Alex Atkin UK]

This is awful news, I don't trust VM to not stop selling symmetrical or crank up the price to offer it only as a "business" service.  :'(

That said if its not economically viable, I guess its better than it going bankrupt.  But would they even bother to roll it out to my area that already has VM service now?

[Chrysalis]

Exactly my concerns.  Because Openreach have one eye on rural, VM might actually be seeing CF as their biggest threat, especially as the upload is symmetrical.

People have been managing to use CF based services to get gig1 retention deals as well.

Also unless plans have recently changed VM have already announced they plan to rollout FTTP in their DOCSIS areas, so if your area has VM they will be rolling it out.  Buying CF would of course allow them to not need to do that.

[dee.jay]

CF have a number of wholesale agreements going on - so what will happen to all of those?

[Alex Atkin UK]

Well VM do backhaul I believe, so its not impossible to believe agreements will continue.  But if they will want to lease to the competition going forward, its a concern.

[XGS_Is_On]

This is awful news, I don't trust VM to not stop selling symmetrical or crank up the price to offer it only as a "business" service.  :'(

That said if its not economically viable, I guess its better than it going bankrupt.  But would they even bother to roll it out to my area that already has VM service now?

Their own XGS will be symmetrical so no worries there.

[XGS_Is_On]

CF have a number of wholesale agreements going on - so what will happen to all of those?

VM want to wholesale and have been working with potential partners on small scale trials already. It's not a major issue.

[Chrysalis]

Ok thats good news then, so I assume if this deal happens the agreements will stand, just possibly amended to new terms.

[XGS_Is_On]

Should also be noted it's not VMO2 that'd be buying. It's the Liberty Global / Telefonica / InfraVia joint venture Nexfibre that would be in play.

VMO2 are anchor tenant for that joint venture. They'd be buying the wholesale products that Nexfibre offers alongside everyone else.

https://infraviacapital.com/companies/nexfibre/
https://www.telefonica.com/en/communication-room/liberty-global-telefonica-and-infravia-form-joint-venture-to-build-a-new-fibre-network-in-the-uk/

The Joint Venture will construct and operate a wholesale fibre-to-the-home (FTTH) broadband network of up to 7 million premises that will not overlap with VMO2’s existing network.

[stevebrass]

CF have a number of wholesale agreements going on - so what will happen to all of those?

CF would be still be legal entity - just with different owners - so current agreements would continue.

[Chrysalis]

Should also be noted it's not VMO2 that'd be buying. It's the Liberty Global / Telefonica / InfraVia joint venture Nexfibre that would be in play.

VMO2 are anchor tenant for that joint venture. They'd be buying the wholesale products that Nexfibre offers alongside everyone else.

https://infraviacapital.com/companies/nexfibre/
https://www.telefonica.com/en/communication-room/liberty-global-telefonica-and-infravia-form-joint-venture-to-build-a-new-fibre-network-in-the-uk/

Right that makes much more sense, thanks for this information.  I would still prefer if CF remained as they were, but this is better than CF going broke and certainly better than how I originally thought the arrangement might turn out.

[dee.jay]

CF would be still be legal entity - just with different owners - so current agreements would continue.

Yes, good point

[XGS_Is_On]

Poked a couple of journos and stories changed to reflect not VMO2 acquisition.

Yes, good point, of course Nexfibre would acquire the contracts that CityFibre had signed. Not a bad place to be having VMO2, Vodafone and TalkTalk on your fibre network.

Room for another insurgent altnet but perhaps that's all it'll be: Openreach, Liberty Global, and A N Other depending where you are in the country. Hyperoptic should be consumed in the not too distant, G.Network may be distressed soon, leaving Netomnia largest network other than the big two.