The interim report was published this morning. It gives nexfibre, the joint venture of Liberty Global, Telefónica and InfraVia, and Substantial until 5pm on 16 October to submit remedy proposals. The CMA will then consult publicly on remedies before its final decision, due by the statutory deadline of 15 December 2026.
nexfibre’s shareholders said the report “does not reflect the commercial and competitive reality of Britain’s fibre market”. CityFibre, which bid for Substantial in 2025, urged the regulator to block the deal.
CityFibre the likely alternative buyer
The CMA’s findings rest on its view of what would have happened without the deal. nexfibre and CityFibre both bid for Substantial in a 2025 sale process.
The regulator said Substantial’s financial outlook had deteriorated. Its shareholders had a strong incentive to sell to CityFibre, and CityFibre would likely have been able to raise funding at a valuation they would accept.
Its provisional view is that the most likely alternative is a CityFibre acquisition of Substantial. CityFibre would then wholesale the Netomnia network to its ISP customers, including Sky and VodafoneThree, and sell retail brand YouFibre to a third party.
From 32% to 18%
The CMA found that VMO2/nexfibre’s network is fully overlapped by Openreach. Substantial overlaps around 14% of it and CityFibre around 18%, with minimal overlap between Substantial and CityFibre.
Had CityFibre bought Substantial, three wholesale providers (Openreach, VMO2/nexfibre and CityFibre) would compete across around 32% of the VMO2/nexfibre footprint. Under the nexfibre deal, that falls to around 18%.
The CMA’s figures assume VMO2 upgrades its full cable network to FTTP. It said the results are similar when based on current FTTP coverage alone.
From Netomnia’s side, around 26% of the Substantial network is overlapped by VMO2/nexfibre’s FTTP today. That would rise to around 82% if VMO2 upgraded its whole cable network to fibre.
The 26% figure compares with the 17% FTTP overlap cited in an Assembly Research report commissioned by nexfibre in June. Once VMO2’s planned cable upgrades are counted, the overlap is closer to the 80% figure CityFibre CEO Simon Holden put forward when the deal was announced.
The CMA described CityFibre as a “vigorous wholesale competitor”. It said Openreach, as a regulated business that cannot freely compete on price and service, would not offset the loss of competition. Other altnets were judged too small to act as a meaningful constraint.
The regulator added that weaker wholesale terms tend to feed through to retail prices. The impact would therefore fall disproportionately on consumers and businesses in the midlands and north of England, where Substantial’s network is concentrated, including Birmingham, Bradford and Manchester.
Efficiency case rejected
nexfibre has argued that the deal would unlock £3.5 billion of investment and create a scaled wholesale challenger to Openreach.
The CMA accepted that the deal would add some scale. However, it said VMO2’s own cable-to-FTTP upgrade programme would erode most of that gain. It also found limited evidence that the deal would make ISPs more likely to sign wholesale agreements with VMO2/nexfibre.
The regulator noted that nexfibre’s FTTP network covers around 2.6 million premises, with VMO2 as its only customer. It provisionally concluded that the parties’ main efficiency claim was not merger-specific and would not be sufficient to prevent an SLC.
The CMA stressed that its findings relate to this deal and its level of network overlap. They do not reflect a view on wider altnet consolidation, which continues to reshape the sector as operators including CityFibre seek fresh capital.
Reaction
In a joint statement, nexfibre’s shareholders pointed to the Government’s Strategic Steer to the CMA, which calls for the regulator to support the UK’s attractiveness for international investment.
“Standing in the way of this deal would suggest that Britain is closing the door on international investment,” they said. They added that it would further entrench “Openreach’s monopoly” and that they would continue to engage constructively with the CMA.
A CityFibre spokesperson said: “The CMA is right that this proposed transaction would significantly reduce competition.”
“After recognising that harm, it is vital that the CMA takes the next step and blocks the deal,” the spokesperson added.
Background
InfraVia, Liberty Global and Telefónica agreed the deal in February. They committed £1 billion in new net funding: £850 million from InfraVia and £150 million jointly from Liberty Global and Telefónica.
The CMA opened an initial review in April. It then fast-tracked the deal to Phase 2 on 1 July at the parties’ request.
Interested parties have until 5pm on 23 October to respond to the interim findings. The CMA’s full interim report is due to be published shortly.
Related stories
- CityFibre raises competition concerns over nexfibre’s Substantial Group acquisition
- nexfibre CEO: Netomnia acquisition boosts UK fibre consolidation and challenge to Openreach
- nexfibre calls for UK fibre consolidation as Assembly Research report backs Netomnia acquisition
- CMA fast-tracks Netomnia deal to Phase 2, sets December deadline
- CityFibre to raise £900m from shareholders as it eyes further Openreach challenge
- Private equity moves to exit UK fibre as altnet consolidation accelerates
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