UK Fibre Consolidation: What the Nexfibre Deal, the SSP and the Access Review Mean for Transactions
The UK fibre market is consolidating. Nexfibre’s £2 billion acquisition of Netomnia, announced on 18 February 2026, is the largest altnet transaction to date and signals the start of a restructuring phase that government, regulator and market have each been anticipating. For advisors, investors and operators working on telecoms infrastructure transactions, three developments in Q1 2026 set the framework for what comes next: the government’s Statement of Strategic Priorities for telecoms, published on 11 February; the Nexfibre-Netomnia deal itself; and Ofcom’s Telecoms Access Review 2026-31 statement on 17 March.
The market context: too many networks, not enough returns
The UK now has over 100 fibre network operators. Full-fibre broadband reaches 69% of premises, with gigabit-capable networks at 83%. That build-out was funded by over £40 billion of private investment, much of it from PE-backed altnets that entered the market between 2018 and 2023.
The problem is commercial. Altnet cumulative accounting losses reached £1.5 billion in 2024. Only one altnet, Hyperoptic, has reached EBITDA-positive status by conventional measures. Customer take-up has lagged build targets. Overbuild in urban areas has compressed margins. And as KPMG noted in June 2025, the sector’s focus has shifted from expansion to survival.
Refinancing pressure is accelerating the timeline. AlixPartners reported that 47% of UK fibre companies face refinancing a material proportion of their debt or equity by 2026. Banks have pulled back from altnet lending. In the first half of 2025, 96% of altnets surveyed were considering M&A or partnerships. The question is no longer whether consolidation will happen, but on what terms.
The Nexfibre-Netomnia deal: a template for the next wave
The Nexfibre acquisition of Substantial Group (which owns Netomnia, YouFibre and Brsk) is the first deal at scale. It creates a platform of around 8 million full-fibre premises by 2027, making Nexfibre the largest independent challenger to BT Openreach.
The deal structure is instructive for future transactions. InfraVia Capital Partners commits £850 million of new capital. Liberty Global and Telefonica contribute £150 million jointly. VMO2, in exchange for committing wholesale traffic across 4.6 million overlapping and adjacent homes, receives approximately £1.1 billion in cash and an indirect 15% stake in Nexfibre, plus ownership of Netomnia’s retail customer base. The post-completion ownership splits broadly 50% to InfraVia and 50% to Telefonica Infra, Liberty Global and VMO2 jointly.
This is a wholesale-anchored infrastructure model. The economics depend on long-term wholesale commitments from VMO2, not retail customer acquisition. That structure distinguishes it from earlier altnet deals and points to where the market is heading: scale platforms underpinned by wholesale anchor tenants, with retail brands as a secondary consideration.
CityFibre has raised competition concerns over the deal, citing 80% network overlap and reduced consumer choice. CMA scrutiny is expected. The transaction is subject to regulatory approvals and is expected to complete by Q3 2026.
The regulatory framework: SSP and Access Review
Two regulatory developments frame the conditions for deal-making.
First, the government’s draft Statement of Strategic Priorities, the first refresh since 2019, acknowledges that the fixed market will undergo consolidation over the Access Review period. The SSP states that future regulation should allow firms making large and risky investments in infrastructure the opportunity to earn a return commensurate with the risk incurred. That language matters for deal valuations: it signals that government does not intend regulation to suppress the returns that infrastructure investors need to justify acquisition prices.
Second, Ofcom’s Telecoms Access Review 2026-31, as we analysed in our earlier article on the Review, maintains SMP regulation on Openreach while acknowledging that the market is more fragmented than anticipated. Ofcom expects consolidation to continue. The regulatory framework keeps Openreach access obligations in place, which protects downstream competition, while creating space for infrastructure-level consolidation among altnets.
For telecoms transactions, this combination means that buyers can plan around a stable five-year regulatory period (to March 2031) with known access pricing and a government that views consolidation as necessary rather than harmful.
The CMA dimension: lessons from VodafoneThree
Any acquirer in this market will face CMA review. The VodafoneThree merger, cleared in December 2024 with purely behavioural remedies, is the key precedent. It was the first time the CMA accepted a behavioural-only remedy package in a telecoms merger, a reversal of the structural-remedy position the CMA advocated in the blocked Hutchison/O2 deal in 2016.
VodafoneThree’s remedies included an £11 billion network investment commitment over eight years, tariff caps and preset MVNO terms for three years, overseen by both the CMA and Ofcom. Breach penalties under the Digital Markets, Competition and Consumers Act 2024 can reach 5% of group worldwide turnover.
For fibre deals, the precedent suggests the CMA will accept investment commitments and conduct remedies over structural divestment, provided the merged entity can demonstrate pro-competitive outcomes. That said, the Nexfibre-Netomnia overlap is substantial. CityFibre’s objections will test whether the CMA applies the same logic to fixed infrastructure as it did to mobile.
What this means for deal structuring
Advisors and investors working on telecoms regulation and infrastructure transactions should note three points.
First, wholesale anchor commitments are now the critical commercial term. The Nexfibre deal works because VMO2 underwrites the traffic. Future deals will need similar wholesale foundations, whether from ISPs, mobile operators or enterprise customers. Regulatory due diligence on the durability of those commitments is central.
Second, the regulatory window is favourable. A five-year Access Review period, a government SSP that supports investment returns, and a CMA disposed toward behavioural remedies create a window for transactions that may not remain open indefinitely.
Third, expect CityFibre to be both acquirer and objector. With its £2.3 billion refinancing completed in 2025 and an £800 million accordion facility earmarked for acquisitions, CityFibre is positioning as the alternative consolidator. The competitive tension between the Nexfibre/VMO2 platform and the CityFibre platform will shape deal dynamics across the sector.
Viewpoint
The UK fibre market is moving from a build phase to a buy phase. Government, Ofcom and the CMA are each, in different ways, creating the conditions for that transition. The Nexfibre-Netomnia deal will not be the last transaction of this cycle. For operators seeking scale, PE investors assessing exit routes and acquirers evaluating targets, the Q1 2026 regulatory framework provides the clearest signal yet that consolidation is not just expected but actively accommodated.
Bratby Law advises on telecoms infrastructure transactions, including JV structuring, network-sharing agreements, regulatory due diligence and M&A in the telecoms sector. For advice on the transaction implications of the Telecoms Access Review or UK fibre consolidation, contact Rob Bratby.