Virgin Media O2 nears Openreach deal to pause its fiber build

Virgin Media O2 is close to an agreement to use BT's Openreach network where its own fiber does not reach, according to a Financial Times report cited by Data Center Dynamics. The deal would pause part of the UK operator's buildout.

VMO2 would stop a planned upgrade of its HFC network and defer new FTTP construction, according to the report. The FT links the pullback to concern over VMO2's £22 billion ($29.55 billion) debt pile. Openreach's network is expected to pass 25 million premises by the end of the year. Virgin Media O2 declined to comment, Data Center Dynamics said.

For investors underwriting UK fiber, the arrangement would move some build costs from VMO2's own capex to wholesale payments to Openreach. VMO2 is separately set to receive a £1.1 billion ($1.48 billion) cash injection for transferring 4.6 million homes onto Nexfibre, the broadband network owned by its shareholders.

Infravia, Liberty Global and Telefónica pledged £1 billion ($1.35 billion) of new net funding to Nexfibre for that transaction. Infravia committed £850 million ($1.1 billion), and Liberty Global and Telefónica jointly committed £150 million ($201 million). The Competition and Markets Authority has said it could block Nexfibre's planned £2 billion ($2.69 billion) takeover of Netomnia.

The FT report comes weeks after VMO2's owners were reported to be seeking £600 million ($805 million) of cost cuts, as Private Wealth Daily previously reported. VMO2 and Nexfibre's combined UK network reaches about 19 million premises, 9 million of them full fiber.