Virgin Media O2 Bonds Fall as UK Fibre Rivals Gain Ground and Focus Turns to nexfibre’s £2 Billion Substantial Purchase

Virgin Media O2’s bonds fell as company disclosures pointed to continued pressure in the UK broadband market and outlined the implications of nexfibre’s planned £2 billion acquisition of Substantial Group.

In its Q1 2026 earnings release, Virgin Media O2 said the consumer fixed market remained under competitive pressure, weighing on ARPU, and reported a seasonal adjusted free cash flow outflow of £468.3 million for the quarter ended 31 March 2026. It said business revenue declined, wholesale revenue increased on MVNO growth, fixed-network leases and pre-enablement and installation income, and network construction and other revenue fell because of reduced nexfibre build activity.

The company reported net senior debt to annualised adjusted EBITDA of 4.07x and net total debt to annualised adjusted EBITDA of 4.38x, or 5.86x including obligations excluded from covenant calculations. In its annual bond report, Virgin Media O2 said its fixed network footprint reached 18.8 million serviceable homes at 31 December 2025, with more than 16 million passed by its own infrastructure and most of the remainder served by nexfibre.

The report said nexfibre’s acquisition of Substantial, which includes Netomnia, YouFibre and Brsk, is expected at completion to include more than 3.4 million fibre premises and more than 500,000 customers. Combined with nexfibre’s existing build and 2.1 million Virgin Media O2 premises to be upgraded, this would create a nexfibre full-fibre footprint of about 8 million premises by the end of 2027. Under the February 2026 agreements, Virgin Media O2 committed to traffic and wholesale arrangements on 4.6 million overlapping and adjacent homes, agreed to pay wholesale fibre access fees on overlapping and upgraded premises, and is set to receive about £1.1 billion in cash and an indirect 15% stake in nexfibre, while nexfibre would sell Substantial’s retail business to Virgin Media O2 for £150 million. The transaction remains subject to regulatory approvals, with completion expected in Q3 2026, and the UK Competition and Markets Authority opened its case process in April. Ofcom said full-fibre broadband was available to 78% of UK residential premises as of July 2025 and estimated fixed telecoms network investment fell 14% in 2024, largely because many alternative network operators slowed or halted deployment in response to funding pressures.