The Competition and Markets Authority (CMA) has provisionally found that Nexfibre's £2 billion deal to buy rival fibre broadband firm Netomnia could “substantially” impact competition in the wholesale supply of fixed broadband services in the UK. It has now asked Nexfibre to put forward plans to address its concerns.
Deal details and market impact
Nexfibre, a joint venture backed by Liberty Global and Telefonica – the co-owners of Virgin Media O2 – as well as InfraVia Capital Partners, announced in February a deal to buy the owner of Netomnia, the UK's second-largest “altnet” fibre network. At the time, Nexfibre said the acquisition would boost its network reach to about eight million premises by the end of 2027, challenging BT's Openreach network.
Next steps and responses
The CMA said it is asking Nexfibre and Netomnia's owner Substantial – which also owns Brsk fibre broadband network provider and retail providers YouFibre and Brsk ISP – to submit proposals to allay its competition concerns by October 16. It will then consult on these publicly before making a final decision.
Nexfibre's owners said the CMA's interim report “does not reflect the commercial and competitive reality of Britain's fibre market”. In a joint statement, the group's shareholders said: “It fails to prioritise the fibre investment the country needs, and the creation of a scaled, sustainable challenger to Openreach.”
They added: “This deal unlocks £3.5 billion of international investment, which would increase consumer choice and support the faster rollout of full fibre broadband nationwide. Standing in the way of this deal would suggest that Britain is closing the door on international investment, further entrenching Openreach's monopoly, and leaving consumers to pay the price. We will continue to engage constructively with the CMA to secure an outcome that backs sustainable competition, investment and growth.”
Rival broadband altnet provider Cityfibre called on the CMA to block the deal. A spokesperson for Cityfibre said: “The CMA is right that this proposed transaction would significantly reduce competition and risks the benefits being delivered for UK consumers: faster speeds, greater innovation and lower prices. After recognising that harm, it is vital that the CMA takes the next step and blocks the deal.”
