Britain’s competition regulator has raised concerns that Nexfibre’s proposed acquisition of fiber-network operator Netomnia could substantially reduce competition in the UK broadband infrastructure market.
The Competition and Markets Authority said its provisional assessment found that CityFibre would have been a stronger alternative buyer of Netomnia, and that a Nexfibre-Netomnia combination could weaken competitive pressure in the rapidly expanding market for full-fiber broadband networks.
The regulatory challenge matters because Britain is in the middle of a major transition from older copper telephone networks toward faster fiber-to-the-premises infrastructure.
Alternative network operators have spent billions of pounds building fiber systems designed to compete with BT’s Openreach network.
Nexfibre is one of those challengers. Its proposed acquisition of Netomnia would consolidate two significant independent fiber operators at a time when financing conditions are already forcing consolidation across the industry.
The CMA’s concern centers on what competition would look like without the transaction.
Regulators concluded provisionally that CityFibre represented a credible alternative purchaser and that its ownership of Netomnia could have produced stronger competition than the proposed Nexfibre combination.
Nexfibre disputes that analysis and has described the regulator’s alternative scenario as unrealistic.
The company now has an opportunity to propose remedies addressing the CMA’s concerns before regulators make a final determination, which is expected in December.
For investors, the case is another indication that consolidation among telecommunications infrastructure companies will face close regulatory scrutiny even when operators argue that greater scale is necessary to finance expensive network construction.
The ultimate decision could influence not only Nexfibre and Netomnia but the broader restructuring of Britain’s fragmented alternative-fiber industry.
