A small line or two in the paperwork but incredibly significant part of the £2 billion acquisition of Substantial Group (Netomnia) needs highlighting.
“nexfibre to finance the fibre upgrade of the 2.1m VMO2 HFC homes (that are adjacent to the Netomnia footprint) with VMO2 paying wholesale fibre access fees on its customers in those homes as the fibre becomes available (with the majority expected to be ready by the end of 2027).”
Extract from full release on acquisition
This is in addition to the couple of million homes that are currently coax based, but would be moved to the Netomnia XGS-PON footprint because it is already present outside the home in ducting or on poles.
So our analysis from this morning has moved on somewhat…
Based on the current footprints we said that post acquisition would have something like a 4.49 million premises XGS-PON footprint, but nexfibre building to 2.1 million homes with VMO2 coax currently on the fringes of the Netomnia footprint will increase that figure to 6.59 million premises. Additionally there is an expected 400,000 premises of Netomnia rollout that is already in the pipeline giving a total of 6.99 million premises and with almost two more years of building in other parts of the country we are looking at a nexfibre XGS-PON footprint in the region of 7 to 8 million premises.
Defining which 2.1 million homes will see the nexfibre rollout is potentially possible, but doing so with high confidence would be impossible without access to lots of future planning paperwork from VMO2/nexfibre.
It will be interesting to see how nexfibre completes this 2.1 million premises expansion, as in will it use the VMO2 ducting or continue as it has in other areas to extensively use the Openreach PIA products.
Netomnia has in the past managed to rollout to 1 million premises a year, and therefore it is very possible the acquisition may be looking at keeping the build teams and planners from within Netomnia busy, i.e. this is less about a nexfibre expansion but renaming the Netomnia teams who can continue doing what they do now, but with a clear focus on overbuilding the old coax network.
nexfibre rolling out to 2.1 million VMO2 coax passed premises raises some questions about the future of Project Mustang. Are we going to see VMO2 shift to being the retail arm and nexfibre become the network company, therefore construction debt will be with nexfibre investors and Virgin Media O2 can focus on selling broadband packages and TV subscriptions. Operating the network company at a greater distance from the retail sector might encourage wholesale adoption by others, but CityFibre has done well in getting all the big names outside the BT Group onboard.
One aspect that shows almost perfect timing, the new Telecoms Access Review is set to come into effect in April 2026 and run to 2030. This means I am pretty sure it is too late for Ofcom to consider the impact of a large altnet becoming part of the Virgin Media O2 retail chain. Consultation and changes to the TAR would mean delaying the April start for the new rules.
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This is really interesting.
When targeting an area, picking areas that are close to existing netomnia whilst also already covered by VM coax seems a really odd approach.
Does being close to existing Netomnia really add any benefit? The cost of a rollout is surely in passing past each home and not any backhaul.
An interesting and sensible development. OTOH I shudder to think what the state of the three decade old Nynex underground infrastucture is like. Some of the worst installation I have ever seen [here in south Manchester] with trenches excavated willy nilly, damage to other undertaker’s infrastructure, cabinets left open the the elements etc.