Virgin Media O2’s owners are looking to raise hundreds of millions of pounds from investors as the merged firm looks to ramp up investment into fibre broadband across the country.
Liberty and Telefonica, which completed the £31bn merger of Virgin Media O2 last year, have opened talks with infrastructure funds as they look to sell off a stake in a new entity that would look to rival BT’s Openreach, Sky News first reported.
A new firm would be formed in the fundraise, with one source telling Sky news that a deal could eventually top £1bn.
Virgin Media O2 would look to roll out its broadband presence via the new entity into areas where it does not currently have a presence.
The new network that Liberty Global and Telefonica were seeking to create would be on an open access basis, according to sources cited by Sky, with Virgin Mobile O2 as the anchor but with the option available for others to use it for a fee.
Liberty’s vice-chairman Mike Fries said last year that the firm was not interested in funding a seven million-home expansion as a standalone entity, but he flagged that there was “quite a bit of infrastructure money searching for deals like this”.
He added: “There are industrial partners in-country who might be interested in something like that.”
Paolo Pescatore, Tech, Media & Telco analyst at PP Foresight, commented: “The backing from infrastructure funds could now signal a change in tack for the owners of the merged firm.”
“Significant development given that Virgin Media O2 has yet to secure any wholesale deals for its fixed line broadband network. Any move to secure much needed funds will give providers the confidence to forge deals with Virgin Media O2.”
“This will be paramount as part of its grandeur plans to be the UK national champion. In the meantime any funds will help recoup the costs of the joint venture on the road towards an IPO”, he added.