An October report from the UK Competition and Markets Authority (CMA) has cast doubt around nexfibre’s £2bn (US$2.7bn) takeover of DigitalBridge-backed Substantial Group, with sources divided on the potential outcome and the impact on altnet M&A dealmaking across the UK.
A decision on the transaction is expected on 15 December 2026, so we’ve rounded up everything you need to know in this article, first published for TMT Finance subscribers on 22 October.
Substantial is the holding company for wholesale fibre-to-the-home (FTTH) provider Netomnia and retail brands YouFibre and Brsk. It has been the subject of M&A speculation since Netomnia hired JPMorgan to review options in August 2025.
TMT Finance reported in November 2025 that CityFibre and nexfibre were in separate bilateral talks to acquire Netomnia.
In February 2026, wholesale FTTH provider nexfibre, a JV between InfraVia Capital Partners and Virgin Media O2 (VMO2)’s shareholders, Liberty Global [NASDAQ: LBTYA] and Telefónica [BME: TEF], announced it had agreed to acquire Substantial from DigitalBridge.
The CMA’s 2 October 2026 interim report, which provisionally found the deal could substantially lessen competition in UK wholesale fixed broadband, came as a surprise, one source said, with another describing the regulator’s language as concerning.
While two sources still expect the deal to complete, another said nexfibre could pull out following remedies from the CMA, potentially offering rival altnet CityFibre a way back into the process.
CMA raises competition concerns
Throughout TMT Finance’s reporting on the process, sources said the acquisition would help CityFibre meet its fibre expansion targets, including a commitment to make Sky’s full-fibre broadband available to 8 million premises.
The CMA’s interim report notes that, without nexfibre’s offer, CityFibre would likely have acquired Substantial and sold on its retail businesses, adding CityFibre could have funded the acquisition.
According to the report, in this scenario ISPs could choose between the three largest wholesale networks, Openreach, VMO2/nexfibre, and CityFibre, in around 32% of VMO2/nexfibre’s footprint. Under the nexfibre deal, ISPs could only choose between all three in around 18% of that footprint, the report said.
VMO2/nexfibre’s full-fibre network already overlaps with around 26% of Substantial’s footprint, rising to around 82% if VMO2 upgraded its cable network to full fibre, the report adds. In those areas, the deal would leave a choice between two wholesale providers rather than three, according to the report.
On 20 October, nexfibre’s shareholders announced they had not submitted a remedies package, arguing none could address the CMA’s current counterfactuals.
According to its report, the CMA will now consult on possible action to remedy, mitigate, or prevent the competition concerns, though nexfibre’s shareholders said they “remain ready to engage constructively with CMA once the counterfactuals reflect the reality of the market.”
nexfibre’s statement also criticised BT [LON: BT.A]’s recent acquisition of TalkTalk for “shrinking the available wholesale market,” and questioned CityFibre’s financial viability.
CityFibre publicly countered questions around its finances, stating in a 20 October LinkedIn post that the “CMA has already examined CityFibre in detail and is well aware of our financial position, our intentions to recapitalise and of the new £900m contribution from our shareholders.”
Separately, TMT Finance reported in August 2026 that Lazard had been engaged to advise CityFibre’s lenders, and PJT Partners to advise its shareholders, on a recapitalisation process.
According to sources at the time, lenders were in talks to restructure existing debt facilities, while shareholders – Antin Infrastructure Partners [EPA: ANTIN], Goldman Sachs Asset Management, Interogo Holding, and Mubadala Investment Company – are planning to inject capital into the company to fund UK altnet consolidation.
Remedies could revive CityFibre M&A hopes
One source recently told TMT Finance that the CMA appears to have sided completely with CityFibre, adding the report effectively suggests any altnet merger cannot go ahead where there is significant footprint overlap.
While sources agree the CMA is unlikely to block the deal outright, one source expects the regulator to impose strong remedies, such as lowering wholesale charges. This would reduce investor returns, potentially making the deal unviable for nexfibre, the source added.
If nexfibre were to pull out of the process, CityFibre would be left as the only UK altnet capable of acquiring Netomnia, potentially putting it in a favourable position to renegotiate terms, according to one source.
With no remedies package submitted by nexfibre, the CMA will publish an Invitation to Comment on Remedies to consult on possible action ahead of its final decision, due by 15 December 2026, the interim report states.
Altnet consolidation and closing the incumbent gap
Sources said CityFibre cannot progress with a deal until the CMA announces its final decision, a delay that could stall M&A dealmaking across the UK altnet market.
Consolidation is critical for the UK altnet market, which faces overbuild, competition, and financial challenges. During the TMT Finance EMEA 2026 conference, strategic M&A and consolidation was highlighted by 80% of surveyed attendees as the main driver of fibre M&A.
Speakers agreed that regulation and overbuild are suppressing returns and increasing restructuring risks, necessitating consolidation, particularly among operators that are not yet cash-flow positive. Those risks have already materialised for some altnets: Gigaclear announced it completed a recapitalisation in April 2026 that transferred ownership to a consortium of its lenders, while G.Network entered administration in January 2026 and exited under FitzWalter Capital’s ownership in March, according to statements from its administrator and the company.
In November 2025, TMT Finance analysed the potential implications and challenges around the Substantial sale. At the time, TMT Finance reported that a combination of VMO2 and Netomnia’s FTTH networks would climb to more than 9.64 million premises passed, while a deal with CityFibre would create a network passing 7.4 million premises.
In either scenario, Openreach, which passes over 23.4 million premises, would remain the largest full-fibre network, with plans to expand to 25 million by December 2026, according to BT’s Q1 2026 report.
TMT Finance subscribers can read our full coverage of this area, via our data and intelligence platform.
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