A major consolidation move is set to redraw the competitive map of Britain’s broadband sector after InfraVia Capital Partners, Liberty Global and Telefonica agreed to acquire Substantial Group through their joint venture nexfibre.
The £2 billion transaction signals an acceleration of consolidation among Britain’s alternative network providers, a sector that has spent the past few years racing to build full-fibre infrastructure while struggling with rising costs and investor pressure to achieve scale.
Consolidation gathers pace in UK fibre race
Substantial Group has rapidly grown into one of the UK’s biggest alternative fibre players since its launch in 2019, backed by investors including Advencap, DigitalBridge and Soho Square Capital. By the time the deal closes, the company is expected to pass more than 3.4 million premises and serve over 500,000 customers.
For nexfibre, the acquisition is about scale and survival in an increasingly competitive market dominated by BT Openreach. The combined networks will create a wholesale fibre footprint covering roughly 8 million premises by the end of 2027.
When paired with the broader rollout by Virgin Media O2, the combined infrastructure could reach around 20 million premises, offering internet service providers a significantly larger alternative to the incumbent network.
Billions in fresh funding tied to growth plans
The buyers will inject £1 billion in new funding into nexfibre to finance the takeover and expand fibre upgrades. InfraVia will contribute £850 million, while Liberty Global and Telefonica will jointly add £150 million.
Virgin Media O2 will play a central role in the business model by committing traffic across 4.6 million overlapping and adjacent homes. In return, the operator will receive about £1.1 billion in cash and an indirect 15 percent stake in nexfibre, as well as responsibility for managed services including network construction.
The deal also includes the sale of Substantial Group’s retail brands YouFibre and Brsk to Virgin Media O2 for £150 million, keeping existing customers within the wider ecosystem.
A sign of a maturing altnet market
The transaction reflects a shift in the UK fibre market from rapid expansion toward consolidation and long-term financial sustainability. Many smaller alternative network operators have struggled to balance aggressive build targets with rising borrowing costs and slower-than-expected customer uptake.
By combining nexfibre’s infrastructure with Substantial Group’s network assets, the partners are betting that scale will unlock stronger wholesale demand and improve returns on the billions already invested in fibre rollout.
Regulatory approval is still required, with completion expected by the third quarter of 2026. If cleared, the deal will create what executives describe as the largest alternative fibre platform in the UK and intensify competition in the country’s push toward nationwide full-fibre coverage.
BABURAJAN KIZHAKEDATH
