InfraVia, Liberty Global and Telefónica acquire Substantial Group for £2 billion through their existing joint venture, nexfibre

InfraVia, Liberty Global and Telefónica have announced an agreement to acquire Substantial Group.

Founded in 2019, Substantial Group, owned by investors Advencap, DigitalBridge and Soho Square Capital, is the UK’s second largest alternative fibre provider, expected to have more than 3.4 million fibre premises and over 500,000 customers by completion. The acquisition will be made by the parties’ joint venture company, nexfibre, and will unlock £3.5 billion of investment in the UK market.

The combination of nexfibre, Substantial Group’s fibre network (Netomnia) and the customers on 2.1 million Virgin Media O2 premises (which will be upgraded to fibre by nexfibre), will create a scaled, financially secure challenger to BT Openreach, with a full fibre footprint of around 8 million premises by the end of 2027. When combined with the growing fibre footprint of Virgin Media O2, co-owned by Liberty Global and Telefónica, the two networks will collectively reach 20 million premises and give internet service providers a highly attractive wholesale alternative to the incumbent.

Infravia, Liberty Global and Telefónica are committing £1bn in new net funding for nexfibre to fund the transaction – made up of £850m from Infravia and £150m jointly from Liberty Global and Telefónica, with Virgin Media O2 committing traffic on 4.6m overlapping and adjacent homes.

In a joint statement, Vincent Levita, Founder & CEO, InfraVia Capital Partners, Mike Fries, Chairman & CEO, Liberty Global and Marc Murtra, Chairman & CEO, Telefónica said: “By bringing our strengths together, we are creating a scaled and financially secure wholesale fibre 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-fibre coverage and helping ensure the UK remains competitive and ready for the future.”

Rajiv Datta, CEO, nexfibre said: “This transaction creates the largest alternative fibre 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 fibre connectivity makes possible.”

Jeremy Chelot, Group CEO, Substantial Group, said: “This landmark transaction with nexfibre represents the natural evolution of the UK’s fibre 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 fibre.”

Key elements of the transaction

1. nexfibre is acquiring Substantial Group comprising currently of ~3 million premises
   (Netomnia) and a customer base of ~450,000 (expected to rise to over 3.4 million premises and more than 500,000 customers by closing) for an Enterprise Value of £2bn.
2. nexfibre will sell Substantial Group’s retail business, including the YouFibre and Brsk brands, to Virgin Media O2 for £150m ensuring customers continue to receive the same trusted service they know today.
3. nexfibre to finance the fibre upgrade of the 2.1m VMO2 HFC homes (that are adjacent to the Netomnia footprint) with VMO2 paying wholesale fibre access fees on its customers in those homes as the fibre becomes available (with the majority expected to be ready by the end of 2027).
4. VMO2 to pay wholesale fibre access fees on its customers within the 2.5m VMO2 homes that overlap the Netomnia fibre footprint, to begin at closing.
5. In exchange for the wholesale traffic commitment on the 4.6m premises, Virgin Media O2 to receive 1) c. £1.1bn in cash and 2) an indirect 15% stake in nexfibre, The vast majority of the proceeds will be available for deleveraging and the £150m to finance the purchase of Substantial Group’s 500,000 customer base.
6. VMO2 to provide full suite of managed services to nexfibre – including construction – in return for ongoing management and construction fees.
7. Completion of the transaction is subject to customary regulatory approvals and is expected by Q3 2026.
8. Liberty Global and Telefónica advised by Barclays and LionTree, InfraVia Capital Partners advised by Morgan Stanley, and nexfibre by TD Securities.

Read the full release.