nexfibre/Substantial CMA inquiry: UK fibre M&A

nexfibre/Substantial CMA merger inquiry, Bratby Law Transactions

In short: The CMA opened its invitation to comment on the £2 billion nexfibre/Substantial transaction on 23 April 2026. The case is in pre-notification; the statutory 40-working-day Phase 1 clock has not started. The deal is publicly targeted at Q3 2026 completion; that timeline carries real Phase 2 risk, and mandatory NSI Act 2021 notification runs in parallel.

By Rob Bratby, Managing Partner, Bratby Law. Chambers UK Band 2 (Telecommunications). Legal 500 Leading UK Telecoms Partner. 30+ years in telecoms regulation, including Oftel and senior operator roles.

The Competition and Markets Authority opened an invitation to comment on 23 April 2026 on the anticipated acquisition by nexfibre, the Liberty Global/Telefónica/InfraVia joint venture, of the Substantial Group (Netomnia, Brsk, Brsk ISP and YouFibre). Comments close on 8 May 2026. The case is in pre-notification; the statutory 40-working-day Phase 1 clock has not started. For investors, lenders and operators pricing UK fibre M&A, this is the first test of the post-DMCCA merger regime in infrastructure consolidation.

The merger-control regime after the DMCCA

CMA jurisdiction rests on whether a relevant merger situation arises under Part 3 of the Enterprise Act 2002. Under section 23, jurisdiction is triggered where the target’s UK turnover exceeds £100 million, raised from £70 million by the Digital Markets, Competition and Consumers Act 2024 with effect from 1 January 2025, or where the merger creates or enhances a 25% share of supply of goods or services in the UK or in a substantial part of the UK. The DMCCA also added a hybrid “killer acquisition” threshold that catches parties with a 33% UK share of supply and £350 million UK turnover acquiring a target with UK nexus, and a small-transaction safe harbour where each party’s UK turnover is under £10 million.

Under section 33 the CMA can investigate anticipated acquisitions before completion, and under section 24 it can investigate completed transactions for up to four months after completion. The substantive test at each phase is whether the merger has resulted, or may be expected to result, in a substantial lessening of competition (SLC) in any UK market. The CMA’s Merger Assessment Guidelines (CMA129) explain how it frames closeness of competition, entry and expansion, and remedies.

How the law applies to nexfibre/Substantial

Jurisdiction is the first question. Netomnia and the YouFibre/Brsk retail brands are still in scale-up phase and their combined UK turnover is likely below the post-DMCCA £100 million threshold. That would leave the CMA reliant on the 25% share-of-supply test. On a national footprint the merged entity’s fibre-to-the-premises presence remains modest alongside Openreach. The share-of-supply test, however, can be applied to a “substantial part of the UK” and is routinely framed narrowly in local or regional infrastructure footprints. On that framing, the CMA can readily assert jurisdiction even at post-DMCCA thresholds.

The live competition question is whether competitive fibre choice is reduced in the postcodes and local authority areas where nexfibre’s existing overbuild footprint (around seven million premises, built out by Virgin Media O2 with InfraVia funding) overlaps with Netomnia’s (around three million premises). The CMA’s framework looks at closeness of competition in local geographic markets, together with the likelihood of entry or expansion by Openreach, CityFibre and other altnets. Loss of a competitive retail alternative in local authority areas where nexfibre and YouFibre/Brsk currently overbuild one another is a plausible first-day SLC theory.

A second structural feature is the post-close retail carve-out. On completion, the YouFibre and Brsk retail brands transfer to Virgin Media O2 (the separate Liberty Global/Telefónica joint venture that is already nexfibre’s principal retail customer) for £150 million. That is a discrete concentration in FTTP retail distribution and the CMA will be asked to look at the wholesale consolidation and the retail disposal together.

Implications for investors, lenders and operators

Invitation-to-comment runs until 8 May 2026. Pre-notification discussions are under way but the formal Phase 1 clock only starts when the merger notice is treated as complete. A realistic earliest Phase 1 decision is late summer or early autumn 2026, not mid-June. That leaves a narrow window against the publicly-announced Q3 2026 completion target, with Phase 2 risk on the face of it: the CMA has referred UK telecoms transactions to Phase 2 on both of its recent major inquiries, and the policy environment is not obviously more permissive.

Mandatory notification is also required under the National Security and Investment Act 2021. The communications sector is a specified sector: acquisitions of more than 25% of voting rights in a qualifying entity that operates a public electronic communications network trigger notification to the Investment Security Unit. Notification is mandatory whether or not the transaction raises national security concerns; completion without clearance is void. If you are assessing either regime on a fibre deal, our regulatory due diligence guidance sets out the timelines and typical workstreams.

Change of control does not trigger any Ofcom clearance or approval process: Ofcom has no formal role in merger control and cannot block the deal or impose conditions, although the CMA may seek its input under concurrency arrangements. The General Conditions of Entitlement, made under section 45 of the Communications Act 2003, continue to apply unchanged to the Substantial Group entities as Communications Providers after completion.

Viewpoint

The CMA is being pulled in two directions in the same case. Government policy supports gigabit rollout, altnet consolidation and the capital commitments needed to complete the build. Equity investors prefer less competition, not more: consolidation is how returns get delivered. The CMA’s statutory mandate under section 22 of the Enterprise Act 2002 cuts the other way, requiring it to act where a merger has resulted, or may be expected to result, in a substantial lessening of competition in any UK market.

I expect Phase 1 to focus on two questions: whether there is local-area SLC in the overlapping postcodes; and whether the post-close retail disposal to Virgin Media O2 dilutes retail-level rivalry where YouFibre and Brsk were previously separate competitors. The Gigaclear lender-led restructuring and the wider UK altnet re-equitisation support a credible distressed-exit argument of the sort recognised in the CMA’s Merger Assessment Guidelines. The retail-overlap point is harder for the parties: competitive overbuild has been the positive case for altnet entry, and loss of it in specific postcodes is straightforward to demonstrate.

Remedies matter more here than first appears. The CMA’s revised Merger Remedies guidance (CMA87), in force from 19 December 2025, removed the presumption in favour of structural over behavioural remedies at Phase 1. On the facts of this deal, behavioural undertakings on wholesale access terms to Netomnia’s footprint are a workable Phase 1 remedy, with structural divestment reserved for the clearest retail-level SLC findings. See also our earlier analysis of CMA merger control in Gamma Communications.