Virgin Media O2 to axe thousands of jobs

Originally Posted by Pierre

True, but maybe change the title.

To what ? Suggestions please.

[Chrysalis]

Originally Posted by Pierre

VMO2 is not part of Nexfibre.

I think there is a general misunderstanding of the VMO2 / Nexfibre relationship.

VMO2 and Nexfibre are part of the same group, and have the same parent companies LG & Telefonica (Except Nexfibre also have Infravia), but they are not the same company.

It is not VMO2 buying Netomnia it is Nexfibre

VMO2 build and maintain the Nexfibre network, and VMO2 are a wholesale customer on it, but they don't own it.

I think we need to get round this, because in effect this is separation only exists for regulatory reasons.

For example I could setup a retailer, and a wholesaler as two separate companies, on paper they are fully independent from each other, but it would be nonsense to claim they are independent when I own both companies.

Liberty global who own Virgin Media are a shareholder of Nexfibre, so lets stop the pretence there is no shared ownership. This is a structure for accounting and regulatory benefits. Telefonica are also a shareholder. The CMA rightly so have seen through it.

Its hard to have a rational discussion on here, as the forum is filled with VM affiliates.

But my view is this, if we have already decided politically VM should be able to do a hostile take over, then we may as well have no CMA, the CMA exists to protect against these sort of events.

The argument seems to be that we should have no alt nets moving forward, they have no business setting up in this country, they will be gone in X amount of years.

My counter to that is, the CMA should make a decision based on whether they think the merger would create significant market power and hurt competition.

But apparently the CMA instead should be considering the health of Virgin Media, and whether they think Netomnia will survive if the merger is declined, yet Netomnia is more financially healthy than VMO2.

The only time that VMO2 should perhaps get "assistance" in gaining control of the Netomnia, is if the company is indeed about to get liquidated, and there is simply no other options on the table, then the likes of me would support it. Until that day comes then patience is required.

As an example this is a reasonably accurate headline to state VMO2's owners are doing the acquisition rather than Nexfibre is doing the acquisition..

https://www.ft.com/content/cb3ffce2-...syn-25a6b1a6=1

So whether VMO2 own the infrastructure or Nexfibre, is moot, as the same companies own it regardless.

---------- Post added at 22:44 ---------- Previous post was at 22:29 ----------

Originally Posted by jfman

The point is the CMA are proposing to interfere in a market that’s already regulated. The regulation of it is based upon assumptions and aspiration to develop a competitive market that can’t (and won’t) develop without interference.

The wrong call here could sink the aspiration of 90% of the country having a choice of two or more network operators. Handing Substantial to CityFibre also signals that Britain is a bad place to invest - the regulator will limit buyers for your assets if it doesn’t meet their back of a cigarette paper assumptions.

The need to flip for inflated profit is more important than a healthier market?

CityFibre are also an investor.

[jfman]

It’s not a healthier market to have a large number of debt saddled players barely able to service that debt. Those are costs ultimately paid for in consumer bills.

The need to flip for “inflated profit” (as you put it) is ultimately the view of a rational private equity investor. If that’s the model for Burnham’s Britain investors need to know that the state will play fair, and give them reasonable opportunity to make a return on that investment. Gutting the value of every other altnet to suit one set of investors, in particular a set of investors linked to Burnham’s time in Manchester, would be an atrocious look.

It’s particularly noteworthy that the Greater Manchester Combined Authority has taken a keen interest in pushing CityFibre lines to the CMA. None of the other major (or even minor!) cities responded, none of the devolved nations. It’s absolutely grubby.

Despite their keen interest in competition in the telecommunications market the GMCA didn’t respond to the OFCOM Telecoms Access Review.

[Pierre]

Originally Posted by Paul

To what ? Suggestions please.

Virgin Media O2 completely restructuring its business

[Itshim]

Originally Posted by Pierre

Virgin Media O2 completely restructuring its business

How to wind up your customers

[gunner45]

Originally Posted by Chrysalis

I think we need to get round this, because in effect this is separation only exists for regulatory reasons.

For example I could setup a retailer, and a wholesaler as two separate companies, on paper they are fully independent from each other, but it would be nonsense to claim they are independent when I own both companies.

Liberty global who own Virgin Media are a shareholder of Nexfibre, so lets stop the pretence there is no shared ownership. This is a structure for accounting and regulatory benefits. Telefonica are also a shareholder. The CMA rightly so have seen through it.

Its hard to have a rational discussion on here, as the forum is filled with VM affiliates.

But my view is this, if we have already decided politically VM should be able to do a hostile take over, then we may as well have no CMA, the CMA exists to protect against these sort of events.

The argument seems to be that we should have no alt nets moving forward, they have no business setting up in this country, they will be gone in X amount of years.

My counter to that is, the CMA should make a decision based on whether they think the merger would create significant market power and hurt competition.

But apparently the CMA instead should be considering the health of Virgin Media, and whether they think Netomnia will survive if the merger is declined, yet Netomnia is more financially healthy than VMO2.

The only time that VMO2 should perhaps get "assistance" in gaining control of the Netomnia, is if the company is indeed about to get liquidated, and there is simply no other options on the table, then the likes of me would support it. Until that day comes then patience is required.

As an example this is a reasonably accurate headline to state VMO2's owners are doing the acquisition rather than Nexfibre is doing the acquisition..

https://www.ft.com/content/cb3ffce2-...syn-25a6b1a6=1

So whether VMO2 own the infrastructure or Nexfibre, is moot, as the same companies own it regardless.

---------- Post added at 22:44 ---------- Previous post was at 22:29 ----------



The need to flip for inflated profit is more important than a healthier market?

CityFibre are also an investor.

There is no 'pretence there is no shared ownership' as it's a matter of public record in filed accounts that nexfibre is 50% owned by InfraVia Capital Partners and 50% by Liberty Global and Telefónica, SA, and VMED O2 UK Limited (Virgin Media O2) is a 50:50 joint venture between Liberty Global and Telefónica, SA. Although there is some shared ownership they are separate companies and, crucially, it's InfraVia that is funding nexfibre. It's also InfraVia which is putting up the bulk (£850m) in new net equity funding for the proposed acquisition of Netomnia with Liberty Global and Telefónica, SA putting up the remaining £150m. There is also a £1.1 billion commercial and wholesaling agreement whereby nexfibre's sister company, Virgin Media O2 (VMO2), is guaranteeing a massive, long-term wholesale traffic commitment covering 4.6 million homes. In exchange for moving its broadband traffic onto nexfibre's network infrastructure, VMO2 receives an indirect 15% stake in nexfibre alongside roughly £1.1 billion in equivalent structural cash value. It's this agreement which CMA is objecting to.

I take issue with you saying 'Its hard to have a rational discussion on here, as the forum is filled with VM affiliates.' as I've made a number of rational posts on this subject and not once have you refuted the points I made.

You think that 'the CMA instead should be considering the health of Virgin Media, and whether they think Netomnia will survive if the merger is declined, yet Netomnia is more financially healthy than VMO2'. That is not the issue which is this: the CMA has to consider whether heavily indebted CityFibre is a credible buyer of Netomnia, and I've made a post that CityFibre is in no way a credible buyer as it's owners will never do it with their focus on stabilisation rather than acquisition. If the CMA blocks this £2.1bn deal, the ultimate irony is that this would have achieved the exact opposite of its intended goal. If the creditors take over by a debt-to equity swap (most likely) to stabilise the business for sale, Netomnia stops building entirely — effectively reducing the UK's active fibre construction market from three biggest players down to two.

And there's more: nobody else would remotely match the £2.1bn proposal for Netomnia, and the great majority of altnets would be aghast if this happens as they will be up for sale as this sends a signal that the deepest-pocketed buyer in the market is legally barred from acquiring them. Also why would international infrastructure funds and private equity firms bother to make further investments in the UK if they can be blocked from selling to the highest bidder?