Virgin Media recently finished upgrading all 15.5 million of its customers to its fastest gigabit-capable speeds. With average download speeds of 1,130Mbps, Virgin Media M1000 (née Gig1) customers can download feature-length films in crisp 4K Ultra HD within seconds, juggle multiple video calls without a hint of stutter, play multiplayer games online, download software updates and back-up photos – all at the same time! For comparison, the current number of households able to access BT-owned Openreach’s equivalent 900Mbps speeds is a little over 5 million. But Virgin Media isn’t planning on resting on its laurels.
Desperate not to squander its gargantuan lead over the competition (since BT, EE, TalkTalk, Sky and others all rely on infrastructure from Openreach, all of these brands are limited to only offering faster full-fibre speeds to the 5 million or so premises where Openreach had completed its upgrade), Virgin Media O2 is purportedly trying to raise funds from external investors to kickstart another round of speed-boosting upgrades.
According to an exclusive report from Sky News, initial discussions with infrastructure funds began in recent weeks. Liberty Global and Telefonica, the parent companies behind newly-merged Virgin Media O2, are spearheading the project, with external capital injection expected to reach as high as £1 billion for the project. For that, investors will see fibre broadband installed to some seven million homes in areas of the country where Virgin Media O2 doesn’t currently have a presence.
Why would investors want to stump up that much cash so that new Virgin Media O2 customers could access faster speeds? Interestingly, reports suggest this is about more than simply expanding the reach of Virgin Media O2’s broadband network.
Instead, Sky News claims that a new corporate entity could be created, with a large stake sold to investors. This new company would directly challenge Openreach, with other broadband companies able to access its vast infrastructure of full-fibre broadband.
Openreach aims to bring full-fibre broadband to around 25 million premises by December 2026. With seven million premises under its belt, Virgin Media O2 wouldn’t be far behind with a total of 22.5 million homes able to connect to its 1,130Mbps download speeds.
Whispers that Sky Broadband has been looking to move away from Openreach to access the 15.5 million premises able to connect to full-fibre broadband are nothing new, but the latest report from Sky News is likely to pour fuel on that fire again. Whether Sky Broadband is better positioned with Virgin Media O2, which has already proven that it’s not afraid to aggressively upgrade its speeds, or Openreach, which will ultimately reach more homes with its full-fibre rollout, is unknown.
It remains to be seen whether other brands that rely on Openreach, like TalkTalk and Cuckoo, have an appetite to switch away to a new competitor.
Speaking last year, Liberty Global Vice Chairman, President and Chief Executive Mike Fries said that it and Telefonica “would not be excited about funding a 7 million-home expansion ‘on our own,’ meaning putting up all the equity capital with no line of sight to either third-party financing and/or wholesale. On the other hand, I would add that there is quite a bit of infrastructure money searching for deals like this. There are industrial partners in-country who might be interested in something like that.”