The fragmented nature of the UK’s fibre market is a barrier to effective network competition becoming established for the long term. With consolidation now necessary, we review the likely approach the CMA would take to three rumoured transactions.
Altnets reaching fewer than 50,000 premises would be the least attractive acquisition targets. We have grouped those with broader coverage into three tiers (Consolidators, Kingmakers, Strategic additions), with some poised to be key actors in the forthcoming consolidation story.
Only mergers between altnets in tiers one and two would likely give the CMA the scope and/or cause to investigate. The prospect of a deal giving rise to serious competition concerns would depend on factors such as the size of networks involved, rates of overbuild and impacts on customers.
A once rumoured Virgin Media O2-led acquisition of CityFibre could pose risks for wholesale and retail competition. These would reduce if the purchase was channelled through nexfibre, although the CMA might consider the joint venture still has the ability and incentive post-deal to act in the interests of firms with similar ownership, harming third parties.
On paper, a combination of CityFibre and Netomnia/brsk could represent positive outcomes for the market. Minimal overbuild would mean that the transaction would not eliminate a major competitor, while potentially even helping a third scaled fibre network to emerge.
An acquisition by Virgin Media O2 or nexfibre of Netomnia/brsk could be pro-competitive and seems to be the most credible transaction at this point. Such a deal would be unlikely to trigger an official investigation, although it may be instructive for the wider market that the CMA conducts a high level, informal review, if only to take no further action.
It may be the case that what may be best for individual operators, may not deliver what the market needs most. The long tail of altnets harbours the greatest risk of failure, potentially leading to customers in need of rescue.
Altnets covering 50,000 premises could be relatively attractive targets, with some likely to be key players in the consolidation process
Alternative fibre builders represent an important competitive presence in European telecoms, helping to catalyse the deployment of fibre or even spearheading network investment. In Denmark, regional energy providers led the country’s shift to fibre, while in Germany, altnets are rivalling Deutsche Telekom in terms of capex and coverage. In the UK, a considerable number of cash-rich, independent operators have entered the market, acting as a force for good in terms of investment and rollout. However, not all altnets have been created equal, and it is becoming increasingly clear that many will not achieve the requisite size, efficiency or penetration to thrive in the years ahead. Consolidation is therefore a natural evolution of the sector that would lead to a healthier environment more likely to deliver genuine competition as well as good consumer outcomes in terms of choice and price. Openreach is not expected to be part of this process given its preference to build rather than buy, and that it would be difficult for a transaction involving the former incumbent to secure clearance from the Competition and Markets Authority (CMA).
It cannot be perfectly predicted how the CMA might react to any proposed deals between altnets, including whether it would be minded to intervene at all. In the second part of this series, we outline a framework for analysing the potential competition concerns that could arise in future consolidation scenarios and for assessing the prospects of approval. To explore possible responses, we have assumed – influenced by Ofcom’s thinking in the Telecoms Access Review (TAR) – that altnets reaching 50,000 premises would be the more likely candidates for M&A over the medium term, subsequently categorising them into four tiers – see Figure 1:
Tier one: Consolidators (>2 million premises covered): CityFibre, Netomnia/brsk, Virgin Media O2/nexfibre;
Tier two: Kingmakers (750,000-2 million): Community Fibre, Gigaclear, Hyperoptic, Co, Zzoomm/FullFibre. We have also included Netomnia/brsk in this tier given reported approaches made to it by competitors;
Tier three: Strategic additions (50,000-750,000): Including AllPoints Fibre, Fibrus, G.Network, Trooli; and
Tier four: The long tail (<50,000): Including B4RN, Brighton Fibre, Country Connect, Highland Broadband.
Only mergers between altnets in tiers one and two would give the CMA the scope and/or the potential cause to investigate
Consolidation involving the third and fourth tiers of altnets (i.e. ‘Strategic additions’ and ‘The long tail’) would generally not be problematic from a competition standpoint, reflecting somewhat the process in Spain by which Avatel has gained scale outside of the largest cities. In light of recent transactions in the UK, we consider that tier one ‘Consolidators’ or tier two ‘Kingmakers’ would likely face little resistance from the CMA in acquiring altnets from either of the two smaller tiers, whereby the target’s annual revenue would be too low (<£100m) to create a “relevant merger situation” under the Enterprise Act.
We have based our framework on the presumption that tier three operators or a tier two and a tier three altnet (especially in different parts of the country) could combine without issue, for example due to the parties’ revenues not meeting the necessary threshold or because their joint “share of supply” would not be not be sufficiently high (25%+). This could enable further transactions that potentially replicate the effects of targeted acquisitions, such as CityFibre/Lit Fibre, or of the County Broadband/Truespeed merger – with Truespeed itself now reportedly exploring a tie-up with Freedom Fibre. However, the future option for consolidation among Consolidators and Kingmakers, which have a greater presence in the market and perhaps the grandest ambitions, currently provides for more questions than answers.
A Consolidator acquiring a tier two altnet could work in theory and potentially in practice – again on the basis of the market share and revenue tests prescribed by the legislation. For a merger between tier one altnets, as has been suggested in the media, the same could be true, although any deal could be a harder sell. To analyse how the CMA might approach any such proposed transaction, we have considered the following factors:
Size and type(s) of network: For example, effects resulting from the scale of the combined entity;
Overbuild: The degree of existing competition between the merging parties; and
Customers: The impacts on operators at the wholesale and retail levels.
With these issues in mind, we have assessed the potential impacts of three rumoured transactions, including the CMA’s ability to undertake a review and the theories of harm that could surface.
Theoretically, a Virgin Media O2-led acquisition of CityFibre could pose greater risks to competition than if it was channelled through nexfibre
Virgin Media O2 has long been the second largest broadband network in the UK, providing services at the retail level with no wholesale operation. In 2022, its parent companies (Liberty Global and Telefónica), alongside InfraVia, created the nexfibre joint venture to roll out fibre to up to 7 million premises outside of the Virgin Media O2 footprint, as well as to identify wholesale and M&A opportunities. Meanwhile, CityFibre has established itself as a major wholesaler of fibre – and a rival to Openreach. Its network passes 4.6 million premises across the country and is “fully funded” to eventually reach 8 million, and it currently has over 730,000 active customer connections (including from agreements inked with Sky and TalkTalk).
Both Virgin Media O2/nexfibre and CityFibre have shown themselves to be dealmakers in recent years through fairly small-scale cash- or equity-based purchases. It has been widely reported that CityFibre has engaged in negotiations with multiple operators in order to give its “partners” (i.e. customers) as big a footprint as possible, and that nexfibre may provide competition to any attempted consolidation of altnets. However, in March 2023, The Telegraph reported that Virgin Media O2 had held initial talks to acquire CityFibre in a deal that could be worth up to £3bn. Though no sale materialised, the newspaper then reported in June 2025 that CityFibre’s investors Goldman Sachs and Mubadala had discussed with Virgin Media O2 a potential “rescue deal” – something CityFibre’s management denied.
Though talk of such a tie-up has died down, it would meet the criteria for the CMA to consider an investigation and should expect close scrutiny (at Phase 1 as a minimum) for several reasons – see Figure 2. It may also not come through the review process entirely unscathed. First and foremost, given the size of the operators’ footprints, their combination would bring together the two players Ofcom sees as capable of providing a meaningful competitive constraint on Openreach. For Virgin Media O2 specifically, the deal would effectively remove a scaling rival network from the market, while possibly revitalising the wholesale NetCo plans it harboured but then shelved due to Telefónica’s strategic review. The CMA may be concerned, however, that the acquisition could prevent a third national platform emerging, thereby putting at risk the policy goal of enduring infrastructure-based competition, which ultimately delivers positive outcomes for end users. By eliminating an important competitive force, the CMA may foresee the potential for horizontal unilateral effects in terms of price and non-price factors, for instance the merged entity giving preferential access or treatment to its own downstream unit over retail competitors. In addition, it may see scope for the merged entity to restrict downstream competitors’ access to wholesale services and may therefore want to ensure that the retail competition currently enabled by CityFibre persists through specific access remedies.
There would also be significant overlap between the parties’ networks. While The Telegraph stated that this would affect 50% of premises across the joint footprint, other estimates have put this figure as high as 70%. That said, while Virgin Media O2’s network reaches more than 16 million premises, it is predominantly cable, not fibre. The operator’s Fibre Upgrade programme is ongoing and is due to be completed in 2028. Overbuild of fibre would therefore represent a markedly lower percentage. The extent to which the CMA considers overlap a concern could depend on the period over which it would assess the impacts of any proposed deal. With a shorter time horizon, there would still be considerable crossover between the parties’ cable and fibre networks. Whether or not that could contribute to finding a realistic prospect of a substantial lessening of competition (SLC) would rest on its perception of substitutability between the technologies. Over a longer term outlook, Virgin Media O2 will have finished the upgrade, resulting in competition between two fibre networks. The CMA may therefore see the deal as eliminating potential or dynamic competition as, absent the merger, completion of the Fibre Upgrade programme would have resulted in new or increased competition with CityFibre.
An alternative strategy for Liberty Global and Telefónica could be to leverage nexfibre as the vehicle for a CityFibre acquisition, integrating the target’s infrastructure into its own XGS-PON fibre network. The level of overbuild would be limited – certainly in comparison to Virgin Media O2/CityFibre – and the size of the combined footprint could be less troublesome from a competition standpoint. Nevertheless, it would be immediately obvious to the CMA the shared ownership between Virgin Media O2 and nexfibre, and the anchor tenant arrangement between the firms, ensuring that any proposed deal would receive regulatory attention, at least at an initial stage.
In particular, the CMA would be keen to understand the effects on the wholesale market and whether there might be scope for the merged entity to foreclose access to operators that compete with Virgin Media O2 at the retail level, which would restrict routes to market and reduce consumer choice. As a dedicated unit set up to seize wholesale opportunities, nexfibre may not have the incentive to do so, although it may have the ability to. Plus, it would have the ability and incentive to act strategically in a way that benefits the group of companies under the same ownership. The CMA could seek commitments that access to key inputs would not be restricted or degraded in a way that harms competition. In addition, the CMA’s outlook may be guided by the prospect of Virgin Media O2 recommencing plans to enter the wholesale market, which could intensify upstream competition while partially offsetting the impacts of nexfibre and CityFibre coming together. Whether or not this remains part of the operator’s strategy is unclear and may only come to light through discussions and/or submissions made during the CMA’s review.
The combination of CityFibre and Netomnia/brsk could be pro-competitive, helping to establish a third scaled fibre network
Secondly, in October 2025, the Financial Times reported that CityFibre is weighing a bid for Netomnia/brsk following its latest round of fresh funding, approaching the operator about a potential deal that could involve a mix of cash and equity. On initial reflection, such a transaction could hold significant promise – see Figure 3. Though the merged entity’s network would reach less than half of the premises (around 6.5 million) covered by Virgin Media O2, its footprint would be solely underpinned by fibre – with no physical upgrade required. The deal may also accelerate the operators’ standalone build plans, helping to push their collective premises passed into the double-digit millions within the coming years. Together, CityFibre and Netomnia/brsk would create a stronger competitive force, cementing the altnet’s status as a scaled challenger to Openreach and Virgin Media O2/nexfibre. However, the size of the combined network alone would be unlikely to pose any great concern for the CMA, which would not have the ability to intervene under the provisions of the Enterprise Act. In fact, it is conceivable that the CMA would view the tie-up as pro-competitive and a means of helping to deliver lasting infrastructure competition for a meaningful proportion of UK premises.
The risks to competition are also essentially mitigated by the minimal overbuild between the CityFibre and Netomnia/brsk networks. This equates to just tens of thousands of premises, or around 1% of the operators’ combined coverage, often with clear demarcation between the two. The only potential complication to the deal being completed successfully (assuming the parties reach an agreement to consolidate in the first place) is the fact that Netomnia/brsk operates on a vertically integrated basis, while CityFibre is purely wholesale. If Netomnia/brsk was the acquiring party, it may look to expand the availability of YouFibre over its expanded footprint. In the opposite scenario, CityFibre may spin off the newly purchased retail arm, bolstering a smaller downstream operator. With neither eventuality presenting insurmountable obstacles for the parties to address, this potential deal represents the most straightforward and least problematic of those discussed.
A Virgin Media O2 acquisition of Netomnia/brsk offers a lower regulatory risk and a relatively financially healthy asset gained
Thirdly, as reported by the Financial Times (in October 2025), Virgin Media O2 has also looked to Netomnia/brsk as a potential acquisition target to expand its fibre footprint and scale its challenge to Openreach. Netomnia/brsk is currently the fourth largest network operator in the UK, having passed 2.8 million premises and amassed around 400,000 retail customers, the majority of which are served through YouFibre. It is on course to reach 5 million by the end of 2027. Acquisition by Virgin Media O2/nexfibre could be worth up to £2bn and would see the overall fibre footprint expand to 8 million premises, according to reporting. Having reported its first positive adjusted EBITDA figure (£0.3m) in Q3 2025, Netomnia/brsk’s strong financial position relative to some of its peers makes it an attractive acquisition, but also a more plausible candidate for independent survival into the medium term. Its debt per premises passed ratio sits just under £300, rising slightly from £250 in 2024 when Jeremy Chelot (Group CEO, Netomnia/brsk/YouFibre) claimed it was accumulating about a quarter of the debt carried by CityFibre to “build the same thing”.
Given the target’s turnover, the ability of the CMA to review a deal between Virgin Media O2/nexfibre and Netomnia/brsk would depend on how it approaches determining share of supply, including how it treats Virgin Media O2’s self-supply of wholesale access in defining the relevant market share of the merged entity. If a Netomnia/brsk acquisition is channelled through nexfibre, the combined share of connections would mean that the deal would not meet the requisite threshold. If Virgin Media O2 was to move to acquire Netomnia/brsk, the combined wholesale market share (including self-supply) would not automatically trigger a review. However, as with CityFibre, the CMA would likely be mindful of the shared ownership and anchor tenancy between Virgin Media O2 and nexfibre. The prospect of creating a relevant merger situation – and in turn the potential for investigation – would rely on how creative or expansive an interpretation of the share of supply test the CMA takes. Its approach could be influenced by how the CMA views the Virgin Media O2/nexfibre relationship and how strongly it considers that the merger could still raise similar competition concerns to those presented by a deal between Virgin Media O2/nexfibre and CityFibre, for instance by denting the possibility of another scaled operator emerging in the future – see Figure 4.
Despite only beginning deployments in 2020, Netomnia/brsk’s £1.3bn funding round and its ascendent status as one of, if not the, fastest growing altnets would mean its combination with Virgin Media O2/nexfibre would represent a major player exiting the ranks of potential infrastructure-level challengers. Though a combined entity could lead to pro-competitive effects by creating a stronger rival to Openreach, as in a CityFibre deal, it could induce the CMA to seek assurances regarding the protection of retail competition and its related positive outcomes for consumers. Again, we see the merged entity as simultaneously having and not having the ability and incentive to foreclose wholesale access to retail competitors.
Overlap between Virgin Media O2/nexfibre and Netomnia/brsk’s footprints is even more pronounced than in a Virgin Media O2/CityFibre tie-up. Estimates place the network overlap at around 80%, meaning the deal would only see about 500,000 additional premises added to the operators’ combined coverage. Limiting the analysis of footprints to fibre only, and excluding Fibre Upgrade premises, brings that figure down to a more reasonable 12% (350,000 premises), although this may still pose questions about the loss of competition in certain geographies, such as the North West and the West Midlands, where the extent of overbuild is highest.
At the retail level, a deal could plausibly see the separation of Netomnia/brsk’s retail base from its network, with nexfibre taking control of the infrastructure and customers being moved to Virgin Media O2. While the very limited increase in overall market share for Virgin Media O2 would probably not raise eyebrows within the CMA, such a separation could be complicated by Netomnia/brsk’s retail offerings currently supported by wholesale access to Openreach’s fibre network. While Chelot has previously noted that its arrangement with Openreach has been cost efficient (approximately £400,000 to reach 1.5m premises), it would be a novel situation for Virgin Media O2 to be a downstream customer of Openreach.
Certain transactions could be more beneficial to the merging parties than to the broader market
Each of the rumoured deals would reflect a watershed moment for the UK’s fibre market, potentially proving instructive for fibre builders and their investors as to the CMA’s sentiment towards consolidation. Of the three, we consider that a CityFibre merger with Netomnia/brsk would be the least complex, as well as the least worrisome for the regulator. In contrast, a Virgin Media O2/nexfibre acquisition of CityFibre would be the most likely to present potential risks to competition. A tie-up between Virgin Media O2/nexfibre and Netomnia/brsk could indeed have pro-competitive effects, although it cannot be ruled out that some theoretical concerns could arise. While any deal would be unlikely to meet the necessary legislative thresholds for an investigation, there may be value in the CMA exploring current market dynamics and potential merger impacts if only to take no formal action, particularly as it has not assessed the market for nearly five years since approving the merger of Virgin Media and O2 at Phase 2. A high level ‘briefing paper’ post-notification (assuming the parties notify) could offer an appropriate vehicle for this, enabling the CMA to outline details of the proposed transaction in question while clarifying that it does not stand to create a relevant merger situation requiring deeper consideration.
It is worth noting that none of the options we have discussed are certain to materialise. Some may be easier to negotiate commercially, while others may be less painful to complete from an integration perspective. It may also be the case that what may be best for individual operators (e.g. by expanding a network footprint or customer base), may not deliver what the market needs most. For instance, the combination of tier one operators (as well as with tier two altnets) has scope to deliver the greatest impact on the shape the market takes over the coming years despite the regulatory spotlight that would befall it.
In contrast, M&A activity in the lower tiers is less appealing (for example, due to debt loads or adoption challenges), but wouldn’t give the CMA pause for thought – or even power to do something. However, it is here where the existence of multiple sub-scale, overbuilt networks makes limited economic sense. This corner of the market may therefore be the most welcoming of formal policy support to ensure that the fallout from distressed assets does not lead to tangible harm for end users. In the end, a confluence of external factors, including consumer demand, investor sentiment and the economic climate, will influence the urgency and pace of change, with forthcoming developments in the UK a potentially useful point of reference for other countries anticipating similar experiences of consolidation.
