Liberty Global plc, Telefónica Infra and InfraVia Capital Partners have reached an agreement to set up a new Joint Venture (JV) to develop a fiber-to-the-home (FTTH) network in the UK. Liberty Global and Telefónica Infra will jointly hold a 50% stake in the JV, while InfraVia will control the remaining 50% stake.

The new FTTH network will provide services to greenfield premises that are currently not being served by Virgin Media O2 (VMO2). It aims to connect approximately 5 million households by 2026 with an opportunity to expand to an additional 2 million households. The investment related to FTTH network including roll-out, connection Capex and other set-up costs, is estimated to be approximately GBP4.5 billion (US$5.46 billion). The three partners will fund their pro rata share of equity funding aggregating up to GBP1.4 billion (US$1.70 billion) phased over 4-5 years. Additionally, the JV has also obtained GBP3.3 billion (US$4 billion) in fully underwritten debt financing from a consortium of financing banks including a GBP3.1 billion (US$3.76 billion) Capex facility. 

The transaction is expected to be completed in Q4 2022 after obtaining customary closing conditions and regulatory approval. Once the transaction is complete, the JV will be offering FTTH wholesale access to a telecommunications service provider with VMO2 acting as an anchor client. It will enable VMO2 to expand its current coverage in the country as well as support VMO2's efforts to upgrade its existing 16 million premises network. Liberty Global and Telefónica were advised by Barclays, LionTree and Allen & Overy. InfraVia Capital Partners was advised by Lazard, Linklaters and De Pardieu Brocas Maffei.