Virgin Media O2's Owners Call CMA Report "Fundamentally Flawed" — £2bn Netomnia Deal Now Effectively Dead

Photo: via Wikimedia Commons — CC BY-SA 2.0. Fibre optic cable installation in progress on Park Street, Dry Drayton, Cambridgeshire.

The £2 billion takeover that was supposed to reshape Britain's broadband map is, for all practical purposes, dead. The owners of Virgin Media O2 confirmed today that they will not offer the competition watchdog any concessions to save their planned acquisition of fibre network Netomnia — and will instead try to overturn the regulator's opposition outright.

The announcement came in a blistering joint statement from Nexfibre's shareholders — Liberty Global and Telefónica, the co-owners of Virgin Media O2, alongside infrastructure investor InfraVia. Nexfibre is their joint-venture fibre business, and back in February it agreed to buy the owner of Netomnia, Britain's second-largest "altnet" fibre operator, for £2 billion ($2.7 billion). Today the owners said they had decided not to submit any possible remedies to address the Competition and Markets Authority's concerns.

"The CMA's Interim Report is fundamentally flawed," the statement said. "Its conclusions rely on counterfactuals that do not reflect the commercial and financial reality of the UK fibre market. In particular, the assumption that CityFibre will acquire Netomnia is not a credible basis on which to judge this transaction. Nor is the assumption that the billions of pounds of investment enabled by this deal would simply happen anyway."

Why the regulator said no

The CMA's interim report, published earlier this month, provisionally found that the deal could "substantially" reduce competition in the wholesale supply of fixed broadband services in the UK. The regulator went further than a standard objection: it said it would have preferred rival CityFibre to buy Netomnia, and set out its "provisional view" that the most likely outcome if this deal were blocked would be a CityFibre acquisition of Netomnia's parent, Substantial Group.

That assumption is exactly what Nexfibre's owners are calling fantasy. And they argue the market has moved on since the report was written: BT's acquisition of TalkTalk is shrinking the available wholesale market, they said, "while CityFibre's latest accounts and debt restructuring raise further questions about its financial viability. The market has moved on and the CMA's analysis must move with it."

The numbers behind the fight are big. The deal would have added Netomnia's network — covering around 3.3 million premises, with roughly 500,000 customers through its YouFibre retail brand — to the Nexfibre and Virgin Media O2 footprint. The owners say the combined business would have reached 8 million premises with full fibre by the end of 2027, unlocking £3.5 billion of international investment and helping upgrade 2.1 million of Virgin Media's old cable premises to full fibre.

The overbuild problem

But there was always a catch, and CityFibre never let anyone forget it. A Point Topic study put the overlap — or "overbuild" — between the Nexfibre/Virgin Media and Netomnia fibre networks at 832,000 premises. CityFibre's CEO Simon Holden warned the deal would "significantly reduce competition and the choice available to consumers, as well as force hundreds of thousands of Netomnia customers back to VMO2" — raising the prospect, he said, of Britain's broadband market collapsing back into a duopoly between Virgin/nexfibre and BT's Openreach.

The owners say they engaged "in good faith on potential remedies, including commitments on investment and wholesale access," but concluded there was no remedies package that could satisfy the CMA's current assumptions. "The UK now faces a stark choice," they said, "a real, funded plan to unlock £3.5 billion of investment and develop a scaled and sustainable challenger to Openreach, or a fantasy future that will never come."

They remain, they said, "ready to engage constructively with CMA once the counterfactuals reflect the reality of the market." The CMA's statutory deadline for its final decision is 15 December 2026, but with no remedies on the table, industry watchers now expect the deal to be formally blocked.

What it means for your broadband

If the block lands, Virgin Media will have to rethink its plans to upgrade its old HFC cable network to full fibre — part of that programme had come to depend on the Netomnia deal. More broadly, the altnets that were hoping this approval would open the floodgates to further consolidation are going to have to think again. Any merger between larger players will now be scrutinised hard for network overbuild.

There is one possible winner: CityFibre itself, which tried to buy Netomnia before Nexfibre tabled the more attractive offer, and which may now come back with a fresh bid — albeit at a price the sellers won't like nearly as much. That, at least, is the three-player broadband market the CMA says it wants. Whether investors agree that it's a market worth funding is another question entirely.

Editor's note: no broadcast footage from a major UK outlet was available at the time of publication. We will add official video coverage as it becomes available.

Sources

• Reuters — Virgin Media O2 owners to challenge UK regulator over Netomnia deal
• ISPreview UK — Nexfibre and Virgin Media O2's £2bn Netomnia UK broadband deal is effectively dead
• Telecoms.com — CMA raises concerns over Nexfibre's Netomnia purchase
• Light Reading — Nexfibre CEO slams 'counter fantasy' of CityFibre buying Netomnia

Photo: via Wikimedia Commons — CC BY-SA 2.0 (Geograph Britain and Ireland contributor).