Parties to Netomnia and YouFibre takeover say UK regulator's broadband competition case rests on errors

The companies behind the planned takeover of the UK fiber broadband builders Netomnia and Brsk and the internet provider YouFibre have told the Competition and Markets Authority that its provisional case against the deal is wrong. The CMA published their joint response to its interim report on November 13, alongside separate responses from Substantial, the holding company that owns the three businesses, and from Substantial's shareholders. The joint response's pages are dated November 5, but nexfibre says in it that its opinions rest on the information available to it on October 23, the deadline for responses.

The buyer is nexfibre, a wholesale-only fiber-to-the-premises network whose owners are Liberty Global and Telefónica, the joint owners of Virgin Media O2, and funds managed by the private equity firm InfraVia. Virgin Media O2 is its anchor and, for now, only customer, according to the CMA, and its network passes about 2.6 million premises.

What the CMA provisionally found

On October 2 the CMA's inquiry group provisionally concluded that the deal may be expected to result in a substantial lessening of competition in the wholesale supply of fixed broadband, in the companies' combined fiber footprint. Its case rests on what would have happened otherwise. Substantial ran a sale process in 2025 in which both nexfibre and CityFibre bid, and the CMA's provisional view is that, without the nexfibre deal, CityFibre would most likely have bought Substantial, sold its retail arm to another provider and offered the network wholesale to its own customers, which include Sky and VodafoneThree. It said the evidence showed CityFibre would likely have been able to raise the funding for a valuation Substantial's shareholders would accept, pointing to its shareholders' readiness to invest equity.

The difference matters because of where the networks overlap, the CMA said. Openreach covers all of the Virgin Media O2 and nexfibre footprint; Substantial overlaps about 14% of it and CityFibre about 18%, with little overlap between those two. In the CMA's scenario, three wholesale networks would compete across about 32% of the footprint; after the deal, that share falls to about 18%. The CMA calculated these shares assuming Virgin Media O2 upgrades its whole network to fiber, and said they are similar on its current fiber network.

The CMA added that Openreach is regulated and “cannot freely compete on key metrics such as price and service,” that other alternative networks are small, and that the companies' main claimed efficiency was not specific to the merger. It stressed that its findings concern this deal and “do not reflect any view on consolidation in the wider altnet sector.”

The companies' answer

The two companies say they “strongly disagree.” They argue the finding rests on two wrong assumptions: that CityFibre would have bought Substantial, and that Virgin Media O2 would upgrade its cable network to full fiber. Substantial's shareholders rejected CityFibre's offer because it lacked committed funding, they say. According to the companies, CityFibre's recent accounts show its auditors recorded a material uncertainty about its ability to continue as a going concern as recently as April 30, 2026, and it restructured its debts in 2025.

They also say Virgin Media O2 will stop all upgrade work from cable to fiber on its balance sheet from January 1, 2027 at the latest, a decision they said would be announced on November 3. They add that BT's acquisition of TalkTalk strengthens Openreach, argue that wholesale competition is national rather than local, and call the takeover “the only deal on the table” that would immediately create a challenger to Openreach, unlocking £3.5 billion of investment. They ask the CMA to clear it unconditionally.

CityFibre's view, and what happens next

CityFibre, in a response dated October 23 that the CMA published on November 6, said it “strongly supports” the provisional finding. It said its shareholders remain fully committed to its acquisition strategy, that the points about its accounts and restructuring “do not represent new evidence” because the CMA had already examined them, and that BT's TalkTalk deal is not a material change. It called prohibition “the only effective and proportionate remedy.”

In its October 20 consultation on remedies, the CMA named prohibition as a possible remedy and said the companies had made no remedy proposal. Prohibition would stop the deal and normally bar the companies from trying to merge without the CMA's consent for ten years. The CMA said it had not identified an alternative divestiture remedy but would consider other practicable proposals. Its statutory deadline for a final decision is December 15, 2026.