Bankinter | For the purchase, VMO2, 50% owned by Telefónica, has created a fibre joint venture, Nexfibre, with InfraVia Capital. With three million households, Netomnia is the fourth largest broadband network in the United Kingdom. The combined network will cover eight million households with fibre and give VMO2 access to some 20 million installations, compared to the 30 million households covered by BT’s fibre subsidiary, Openreach (21 million with fibre optics).
Bankinter analysis team opinion: The transaction strengthens VMO2’s position in the UK by providing scale to Nexfibre, which doubles its coverage and reduces the gap with Openreach, BT’s fixed network, which is responsible for its fibre optic rollout. It also prevents other operators that opted for Netomnia from strengthening their position.
This transaction is the first step in the expected consolidation of alternative network providers in the UK, which are generally heavily indebted due to the effort of deploying fibre optics and have been capturing market share from traditional operators such as Openreach and VMO2. However, VMO2 remains at a considerable distance from BT and it is not easy to undertake new operations due to its high debt (€25 billion, 5.4x EBITDA).
