Virgin Media O2 reportedly mulling joint venture, BT shares ease

According to the Financial Times, owners Telefonica and Liberty Global - who oversaw the merger last year of O2 and Virgin Media - will start formally contacting potential investors this week about the joint venture. Citing an unnamed person with knowledge of the plan, however, the newspaper added that informal discussions had already begun.

Should the plan go ahead, it could prove a significant threat to incumbent BT’s own growth plans. The blue chip is focused on replacing its traditional copper and cable-based networks with high-speed fibre, with its Openreach division committed to spending £15bn to provide full-fibre networks to 25m homes by 2025.

Virgin Media is already upgrading its own fibre network to around 15.5m premises by the end of 2028, however, and the new joint venture will aim to create a full-fibre network to a further 7m homes. The Financial Times said the new network would be in areas that currently only use copper lines and are primarily served by BT.

As at 1030 GMT, shares in BT were off 2% at 192.85p.

Victoria Scholar, head of investment at Interactive Investor, said: "The [report] doesn’t come as a massive surprise, given that when Virgin Media merged with O2 last year the company pledged ‘investment and innovation in cutting-edge infrastructure and future technology’, and said it planned to invest in fibre and 5G in the UK.

"However, this looks like an expensive way to expand its business and build shareholder value, that ultimately could lead to higher prices for consumers down the line."

BT is due to publish third-quarter results on Thursday.