Virgin Media O2 challenges Openreach pricing tactics while pursuing Netomnia acquisition
Virgin Media O2 has filed a formal complaint with Ofcom, alleging that Openreach is utilizing aggressive wholesale pricing tactics to stifle competition in the UK fibre market. Simultaneously, Virgin Media O2 is leveraging the dispute to urge the Competition and Markets Authority to expedite the approval of its acquisition of Netomnia.
Key Takeaways
- VMO2 CEO Lutz Schüler claims Openreach uses 'drip-fed' discounts to lock in wholesale providers and deter them from rival networks.
- The complaint specifically highlights geographic incentives used by Openreach to target areas where VMO2 infrastructure is present.
- VMO2 is using the regulatory friction to urge the CMA to accelerate approval of its £2 billion acquisition of Netomnia.
- The CMA's phase two investigation into the Nexfibre-Netomnia merger is scheduled for a final ruling by December 2024.
Why It Matters
The dispute underscores the tension between incumbent scale and the survival of the UK's 100+ 'altnets.' If Ofcom permits Openreach’s aggressive wholesale discounting, smaller fibre providers may struggle to secure the long-term volume commitments required for infrastructure ROI. For the broader ecosystem, this signals a shift from a build-centric phase to a consolidation and pricing-war phase. Watch for Ofcom’s response to the complaint, as a refusal to intervene would likely accelerate the exit of smaller players and solidify VMO2's position as the primary challenger to BT’s market dominance.
Additional Context
The UK fibre market is entering a volatile phase of consolidation as smaller providers face mounting financial pressures. Per the Financial Times in June 2024, high interest rates and increased construction costs have forced several alternative networks to seek buyers or additional funding. This environment provided the backdrop for Nexfibre—a joint venture between Liberty Global, Telefónica, and InfraVia—to announce its intent to acquire Netomnia and Brsk. According to ISPreview in July 2024, the combined entity would reach a footprint of 1.5 million premises, positioning it as a significant wholesale alternative to Openreach’s nearly 15 million premises passed. Regulatory scrutiny has intensified as the Competition and Markets Authority (CMA) opened its Phase 2 investigation into the Nexfibre-Netomnia deal. The CMA stated in August 2024 that the merger could potentially reduce competition in the supply of wholesale leased lines and residential broadband in specific local areas. This regulatory hurdle coincides with Openreach’s own aggressive expansion; per a BT Group earnings report in May 2024, the company achieved a record build rate of 1 million premises per quarter, aiming for 25 million by the end of 2026. This rapid rollout, coupled with the Equinox 2 pricing strategy previously cleared by Ofcom, has left competitors like VMO2 claiming that the window for fair infrastructure-based competition is closing.
Read full article at telecoms.com
Get this in your inbox → Subscribe
Enjoy our coverage?
Add StreamingMeme as a preferred source on Google to see more of our streaming news at the top of your Search results.
Add as preferred source