Virgin Media O2 calls BT's £400m TalkTalk rescue a stitch-up as the CMA weighs blocking its fibre deal

A TalkTalk customer who hears that the company is in administration wants to know whether the broadband will still work next week ^[1]. BT's purchase is set up to make sure it does ^[2]. Spread across TalkTalk's customers, BT's price of about £400 million comes to roughly £160 each ^[20], though the same money also takes in PlatformX ^[1].

Virgin Media O2, BT's biggest fibre rival ^[19], pitches its own pending deal in bigger terms. A spokesperson said Nexfibre's purchase of Netomnia would create "a genuine, financially sustainable challenger to Openreach," and said "it now appears that rules might be watered down so the incumbent can roll its tanks over competition and further tighten its grip on the market" ^[5].

The Netomnia network passes more than three million premises and has more than 460,000 customers ^[8], a take-up of about 15 percent ^[21]. The pitch counts premises: Virgin Media's full fibre network already reaches more than nine million locations ^[14].

The CMA looked at wholesale competition. "In our view, the transaction gives rise to a significant reduction in wholesale competition across the parties' FTTP network footprints," the regulator said ^[17]. It fears CityFibre would be squeezed out, leaving Openreach and Virgin Media O2/Nexfibre as the only wholesale competitors where the networks overlap ^[10].

What Substantial sells today matters to the challenger argument. It has no wholesale customers and sells retail broadband through YouFibre ^[11]. CityFibre bid for the business last year ^[15]. The CMA said it must judge whether Substantial would otherwise have stayed independent or gone to CityFibre, because "these two scenarios could lead to materially different conditions of competition" ^[18]. On the interim evidence, the regulator is choosing between two challengers to Openreach, and the alternative it has floated is the one that would wholesale the network ^[6][12].

On the published evidence, the claim that rules are bending for BT rests on Virgin Media O2's statement. "The logic simply doesn't add up. We don't believe rules should be thrown out the window to allow TalkTalk to fall into BT's lap without a proper process and we will be raising our concerns directly with government and regulators," Virgin Media O2 said ^[13]. Virgin Media itself walked away from a deal to buy TalkTalk a few years ago, according to earlier reporting ^[22].

An ISP or altnet planning around both deals can sort any fibre acquisition by asking whether the target sells wholesale access today, and whether the most plausible alternative buyer would. The CMA's interim report flagged one combination: a target with no wholesale customers now and a rival bidder likely to open the network to other ISPs. Substantial has both ^[11][12]. A target that already wholesales gives the regulator less to protect, and so does one with no alternative buyer that would wholesale it. The reporting so far does not answer either question for TalkTalk.