InfraVia, Liberty Global and Telefónica acquire Substantial

InfraVia, Liberty Global and Telefónica have agreed to acquire Substantial Group for £2bn (US$2.7bn) through their joint venture nexfibre, which will reshape the UK wholesale fibre market. 

The transaction unlocks £3.5bn (US$4.55bn) in international investment and strengthens nexfibre’s position as a challenger to BT Openreach.

Founded in 2019, Substantial Group is the UK’s second largest alternative fibre provider. Backed by Advencap, DigitalBridge and Soho Square Capital, it is expected to have more than 3.4 million fibre premises and over 500,000 customers by completion. 

Its network currently operates under the Netomnia brand, delivering full fibre broadband to homes and businesses.

The deal will bring together nexfibre, Netomnia’s footprint and Virgin Media O2’s fibre upgrade programme. 

It centres on wholesale access, where network owners provide connectivity to internet service providers that serve end users.

Building a wholesale challenger

The combination of nexfibre, Netomnia’s fibre network and the 2.1 million customers on Virgin Media O2 premises, that nexfibre upgrades to fibre, creates a scaled alternative to BT Openreach.

By the end of 2027, the enlarged nexfibre footprint is expected to reach around eight million premises. 

When combined with the growing fibre footprint of Virgin Media O2, which Liberty Global and Telefónica co-own, the two networks collectively reach 20 million premises. 

This will give internet service providers a wholesale alternative to the incumbent operator.

InfraVia, Liberty Global and Telefónica have committed £1bn (US$1.3bn) in new net funding for nexfibre to finance the transaction. 

This includes £850m (US$1.1bn) from InfraVia and £150m (US$201m)  jointly from Liberty Global and Telefónica.

Virgin Media O2 will commit traffic on 4.6 million overlapping and adjacent homes, providing wholesale demand across the footprint.

In a joint statement, Vincent Levita, Founder & CEO of InfraVia Capital Partners, Mike Fries, Chairman & CEO of Liberty Global and Marc Murtra, Chairman & CEO of Telefónica say: “By bringing our strengths together, we are creating a scaled and financially secure wholesale fibre challenger to BT Openreach – one that will enhance competition, strengthen the UK’s digital infrastructure and deliver greater choice and quality for consumers and businesses.

“This transaction unlocks £3.5bn (US$4.55bn) in international investment and reflects our shared confidence in the UK as a highly attractive market for long-term investment, supported by the government’s economic policies. 

“We are committed to accelerating full fibre coverage and helping ensure the UK remains competitive and ready for the future.”

Vincent, Mike and Marc describe the agreement as a long-term commitment to wholesale fibre and UK digital infrastructure.

Consolidation and retail continuity

Rajiv Datta, CEO of nexfibre says: “This transaction creates the largest alternative fibre platform in the UK, establishing the foundation for much-needed altnet consolidation and sustainable wholesale competition. 

“It will help drive innovation and deliver the economic and societal benefits that full fibre connectivity makes possible.”

Rajiv says the deal creates scale among alternative network providers and supports sustainable wholesale competition.

Jeremy Chelot, Group CEO, Substantial Group, adds: “This landmark transaction with nexfibre represents the natural evolution of the UK’s fibre market. 

“Consolidation has been inevitable and this deal creates the scaled, sustainable platform needed to drive genuine wholesale competition. 

“Importantly, our retail brand, YouFibre, will remain post-close, ensuring our customers continue to receive the same trusted service they know today, while benefiting from the financial strength and infrastructure scale this combination delivers. This is about building a stronger future for UK fibre.”

Jeremy confirms that YouFibre will remain after completion. Nexfibre is selling Substantial Group’s retail business, including the YouFibre and Brsk brands, to Virgin Media O2 for £150m (US$201m), maintaining continuity for customers.

Transaction structure and next steps

Nexfibre acquired Substantial Group, which currently comprises around three million premises through Netomnia and around 450,000 customers. 

By closing, this is expected to rise to over 3.4 million premises and more than 500,000 customers, for an enterprise value of £2bn (US$2.7bn).

Nexfibre will finance the fibre upgrade of 2.1 million Virgin Media O2 HFC ( hybrid fibre coaxial) homes adjacent to the Netomnia footprint.

Virgin Media O2 will pay wholesale fibre access fees on customers in those homes as fibre becomes available, with the majority expected to be ready by the end of 2027. 

The operator will also pay wholesale fibre access fees on customers within 2.5 million overlapping homes from closing.

In exchange for the wholesale traffic commitment across 4.6 million premises, Virgin Media O2 is due to receive around £1.1bn (US$1.4bn) in cash and an indirect 15% stake in nexfibre. 

Most of the proceeds are available for deleveraging and £150m (US$201m) finances the purchase of Substantial Group’s 500,000 customer base. 

Virgin Media O2 will provide managed services to nexfibre, including construction, in return for ongoing fees. Completion is subject to customary regulatory approvals and is expected by Q3 2026.