Without remedies, Netomnia’s £2bn sale to nexfibre faces a block

On 20 October the owners of nexfibre – InfraVia, Liberty Global and Telefónica – said they had not submitted remedies to the Competition and Markets Authority (CMA) for their £2bn purchase of Substantial Group, which owns the fiber network Netomnia and the retail brand YouFibre. The same day the CMA published an invitation to comment on remedies in which prohibition of the deal is the only option it has identified.

The shareholders called the CMA’s interim report “fundamentally flawed”. Their statement said: “We engaged in good faith on potential remedies, including commitments on investment and wholesale access. But there is no remedies package that can address the CMA’s current counterfactuals, and on that basis we have not submitted one.”

The CMA’s final decision is due by 15 December 2026, and comments on remedies close at 5pm on 27 October. Where merger parties put forward no remedy, the CMA says it will not typically give detailed consideration to anything other than prohibition or the sale of a standalone business. It has found no standalone business to sell in this case.

The dispute has been framed around consolidation among alternative networks, a question on which the CMA says its provisional findings take no view. For a company buying business broadband, the nearer question is how many networks compete to sell wholesale fiber to its internet service provider (ISP). The CMA’s provisional answer is that the deal would leave fewer of them across a significant part of the Virgin Media O2 and nexfibre network.

Where the networks overlap

nexfibre sells only wholesale, and Virgin Media O2 is currently its only customer, according to the CMA. Its full fiber network covers about 2.6 million premises. Substantial’s network is concentrated in the midlands and north of England, including Birmingham, Bradford and Manchester. When the deal was announced, nexfibre put it at about 3 million premises.

The CMA’s interim report found that Openreach overlaps all of the Virgin Media O2 and nexfibre network, Substantial about 14% of it and CityFibre about 18%, assuming Virgin Media O2 upgrades all its cable to fiber. The CMA’s provisional view is that without this deal CityFibre would have bought Substantial and wholesaled its network to CityFibre’s ISP customers. That would put three wholesale suppliers – Openreach, nexfibre and CityFibre – across about 32% of the Virgin Media O2 and nexfibre network. With the deal, the CMA says, that share falls to about 18%.

How wholesale terms reach business bills

Openreach, the CMA found, is “a regulated entity that cannot freely compete on key metrics such as price and service”, while CityFibre, Virgin Media O2, nexfibre and smaller networks offer lower prices. Tier 1 ISPs told the authority that CityFibre’s wholesale offer was strong on price, network speed and reliability.

The CMA drew the line to end customers itself. Where ISPs get better wholesale terms, its summary says, “this is often reflected in better deals for end-consumers and businesses, including lower prices and improved service quality”. It expects the loss of wholesale competition to fall “disproportionately” on the midlands and north of England, where Substantial’s network sits.

A business that buys broadband from an ISP does not see the wholesale contract behind it. The CMA’s case is that the number of networks bidding for that contract shows up in the retail price and service a business is offered.

What the shareholders are betting on

The shareholders’ argument rests on CityFibre. Their statement said BT’s acquisition of TalkTalk “is shrinking the available wholesale market”, and that “CityFibre’s latest accounts and debt restructuring raise further questions about its financial viability”. If CityFibre could not have funded a purchase, the CMA’s comparison of three suppliers against two falls away.

CityFibre disputes that. A spokesperson said, in a statement carried by ISPreview, that the CMA “is well aware of our financial position”. The CMA’s interim summary says the evidence showed CityFibre would likely have been able to raise the finance, and that CityFibre’s shareholders were prepared to invest equity in a Substantial deal.

The deal was also sold on investment. The shareholders’ February announcement said it would bring £3.5bn of investment, that nexfibre would upgrade 2.1 million Virgin Media O2 premises to full fiber and that the combined network would reach around 8 million premises by the end of 2027. The CMA’s provisional view is that Virgin Media O2 has a clear long-term incentive to upgrade its cable network to fiber without the deal, which would erode most of the extra scale.

The shareholders say they “remain ready to engage constructively” with the CMA once its counterfactuals change. If the CMA holds its view to 15 December, prohibition is the only remedy it has put forward. Netomnia’s network would then return to a market in which the authority’s own report names CityFibre as the likely buyer, and in which, on the CMA’s provisional analysis, three wholesale suppliers would compete for ISPs across about 32% of the Virgin Media O2 and nexfibre network.