InfraVia Capital Partners, Liberty Global, and Telefónica have agreed to acquire Substantial Group for £2 billion through their existing joint venture, nexfibre, in a move designed to create a scaled wholesale challenger in the UK broadband market.
Founded in 2019 and owned by Advencap, DigitalBridge, and Soho Square Capital, Substantial Group is the UK’s second-largest alternative fiber provider. By completion, it is expected to have more than 3.4 million fiber premises and over 500,000 customers. The transaction will be executed by nexfibre and is expected to unlock £3.5 billion of investment into the UK market.
The combination of nexfibre and Substantial Group’s fiber network, Netomnia, alongside customers on 2.1 million Virgin Media O2 premises that will be upgraded to fiber, is projected to create a financially secure wholesale competitor to BT Openreach. The enlarged platform is expected to reach around 8 million premises by the end of 2027. When combined with Virgin Media O2’s growing fiber footprint, the networks are expected to collectively reach 20 million premises, offering internet service providers a scalable wholesale network option.
As part of the transaction, InfraVia, Liberty Global, and Telefónica are committing £1 billion in new net funding for nexfibre. This includes £850 million from InfraVia and £150 million jointly from Liberty Global and Telefónica. Virgin Media O2 will commit traffic across 4.6 million overlapping and adjacent homes.
Under the agreed structure, nexfibre will acquire Substantial Group, which currently comprises approximately 3 million premises through Netomnia and around 450,000 customers, for an enterprise value of £2 billion. nexfibre will then sell Substantial Group’s retail business, including the YouFibre and Brsk brands, to Virgin Media O2 for £150 million to ensure continuity of service for customers.
nexfibre will also finance the fiber upgrade of 2.1 million Virgin Media O2 HFC homes adjacent to the Netomnia footprint, with Virgin Media O2 paying wholesale fiber access fees as the upgraded network becomes available, with the majority expected by the end of 2027. Virgin Media O2 will also begin paying wholesale fiber access fees at closing on customers within 2.5 million homes that overlap the Netomnia footprint.
In exchange for wholesale traffic commitments across 4.6 million premises, Virgin Media O2 will receive approximately £1.1 billion in cash and an indirect 15% stake in nexfibre. Most of the proceeds are expected to be used for deleveraging and to finance the £150 million purchase of Substantial Group’s customer base. Virgin Media O2 will also provide a full suite of managed services to nexfibre, including construction, in return for ongoing management and construction fees.
Completion of the transaction is subject to customary regulatory approvals and is expected by the third quarter of 2026. Liberty Global and Telefónica were advised by Barclays and LionTree, InfraVia Capital Partners by Morgan Stanley, and nexfibre by TD Securities.
KEY QUOTES
“By bringing our strengths together, we are creating a scaled and financially secure wholesale fiber 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 £3.5 billion 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-fiber coverage and helping ensure the UK remains competitive and ready for the future.”
Vincent Levita, Founder & CEO, InfraVia Capital Partners; Mike Fries, Chairman & CEO, Liberty Global; Marc Murtra, Chairman & CEO, Telefónica
“This transaction creates the largest alternative fiber 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 fiber connectivity makes possible.”
Rajiv Datta, CEO, nexfibre
“This landmark transaction with nexfibre represents the natural evolution of the UK’s fiber 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 fiber.”
Jeremy Chelot, Group CEO, Substantial Group
