Liberty Global (NASDAQ:LBTYA), the owner of Virgin Media O2 and 5 % of Vodafone, is mulling a takeover of full-fibre alternative broadband provider Trooli for up to £100mln, according to recent reports.
Trooli, which services fibre-to-the-premises (FTTP) high-speed broadband infrastructure across the south of England, has been seeking buyers as part of a broader trend of consolidation in the cramped altnet sector.
Analysts at Deutsche Bank led by Robert Grindle suggested that the Liberty Global (NASDAQ:LBTYA)-Telefónica-InfraVia joint venture nextfibre is seeking to achieve its target of seven million homes (five million by 2026) through a multibillion-pound M&A spree in the coming years.
Liberty Global has not indicated whether it intends to purchase Trooli through the nextfibre joint venture.
An aggressive consolidation push by Liberty Global will present a “material risk” for market leader BT Openreach, said Grindle, whose guidance for Liberty Global shares remains on the buy side.
Grindle predicted that given Virgin Media’s established nationwide brand, purchases of altnets “may accelerate this process”.
Altnets prepare for a shake out
The number of altnets providing high-speed (generally regarded as on gigabit per second) in the UK has exploded in the past decade, as incumbent provider BT was slow to the fibre optic party.
But an inevitable shake out is now expected to sweep across the market as the major providers refocus their efforts.
Veronica Speiser, broadband and telecoms analyst at Point Topic, expects further consolidation in the face of Equinox 2, BT Openreach’s discounted wholesale offer due to go live in April.
“It’s going to get a lot worse” for altnets trying to stay competitive in the face of Equinox 2", Speiser stated, especially since Ofcom has “not really put the brakes on it” despite anti-competitive legal challenges from competitor CityFibre.
CityFibre chief executive Greg Mesche warned that BT Openreach’s Equinox 2 offer “will strangle competition and threaten the pace of full-fibre rollout” while also discouraging investors from investing “the billions of pounds needed to improve UK infrastructure.”