By Paul Sandle
LONDON (Reuters) -The owners of Britain’s Virgin Media O2 have joined forces with French investment firm InfraVia Capital Partners to plough around 4.5 billion pounds ($5.5 billion) into a new fibre broadband joint venture, increasing direct competition with BT.
Virgin’s owners Liberty Global and Spain’s Telefonica, plus InfraVia, said the network would cover around 7 million premises across the UK, in areas not already covered by the existing Virgin Media network, and offer wholesale access to other broadband providers.
BT has long provided the main wholesale network in Britain, giving access to the likes of TalkTalk and Sky. BT is ploughing billions of pounds into its network, extending its fibre offering to 25 million premises by end-2026.
Virgin Media O2 CEO Lutz Schuler said the new JV network combined with an upgraded Virgin Media network would potentially offer gold-standard fibre connections to 23 million premises by 2028.
“We will have two nationwide fibre networks,” Schuler said in an interview. “I think that’s fantastic for the UK.”
Britain, which has lagged most other European countries in the super high-speed network race, is aiming for nationwide full-fibre broadband coverage by 2033 in an attempt to boost economic growth.
It hopes 15 million premises will have full-fibre broadband by 2025.
Friday’s investment announcement knocked BT’s shares to a session low. By 1123 GMT, the stock was down 1.4%, lagging the main index, after falling as much as 4.4% earlier.
Virgin Media’s owners said the new network would be available to 5 million homes that are not served by the current Virgin Media O2 network by 2026, with an opportunity to expand to an additional 2 million homes.
The deal will include 3.3 billion pounds of fully underwritten financing commitments and up to 1.4 billion pounds in equity commitments, the groups said.
Schuler said the company was in discussions with broadband providers such as Sky, Vodafone and TalkTalk about wholesale access, which would be offered across the new network and Virgin Media’s existing footprint.
He said wholesale deals were “like a marriage”, lasting a decade or more, so the company wanted to get them right, saying it will take the time needed instead of rushing into them.
He declined to comment on reports that Virgin Media O2 was in talks about acquiring TalkTalk.
($1 = 0.8232 pounds)
(Reporting by Paul Sandle and Muvija M; Writing by Kate Holton; Editing by Michael Holden and David Holmes)