Virgin Media O2 buys ex-Russian owned Upp — but won’t keep it
Virgin Media O2 bought British broadband provider Upp, and plans to sell it on to a UK fibre builder.
In an all-cash deal, VMO2 acquired Upp and will “carry out integration work”, paving the way for UK broadband company Nexfibre to secure Upp’s network assets within the next year.
Nexfibre, a joint venture by Liberty Global, Telefonica and infrastructure investment firm Infravia, hopes to expand its reach to 175,000 sites in the East of England through the transaction.
Late last year, the UK government ordered Russian oligarch-backed investment company Letterone to sell Upp, saying the ownership was a national security risk.
Although the value of the deal remains undisclosed, it is apparently in the “high tens of millions of pounds”, according to a report in the Financial Times which cited sources.
According to VMO2 boss Lutz Schüler, the move aims to create some rivalry to the “BT status quo”.
“Building on the strong foundations that exist today, Virgin Media O2 and nexfibre have a clear strategy in place to be the biggest fibre challenger in the country,” he said.
VMO2 plans to slash 2,000 jobs by the end of the year as it streamlines its operations, still grappling with over £20bn worth of debt racked up from the merger two years ago.
Upp, previously known as Fibreme, said there will be no service changes but customers will be able to access VMO2 services.
Matthew Howett, founder and chief executive of telecoms research group Assembly said this “could well be the first domino to fall in terms of an altnet being bought by one of the big players.”
“The UK broadband market is set to enter an era of scaled connectivity challengers, after first a period of dominance from the incumbent followed by a proliferation of altnets,” he added.