U.K. operator Virgin Media O2 outlined a plan to upgrade its entire fixed network to full fiber-to-the-premises over the coming years, announcing the move alongside its first-ever quarterly report.
Upgrade work is set to begin this year, with a target completion date of 2028. The company said in a press release the plan includes updates to 14.3 million cable premises and will enable delivery of symmetrical 10 Gbps speeds.
The project was touted as “one of the U.K.’s most efficient fiber rollouts,” costing around £100 (about $139) per premises passed. However, the company noted that figure does not include customer installation costs. Installations will be completed on an on-demand basis as work progresses, it said.
Virgin Media O2 noted it plans to “maintain and develop” its cable network with DOCSIS 3.1 while it works on the fiber build, aiming to deliver speeds of more than 2 Gbps in future.
Lutz Schüler, CEO of Virgin Media O2, said in a statement “This major new fiber upgrade program will see us begin the next evolution of our network,” adding it will ensure the company will “be even stronger for the decades ahead.”
But New Street Research questioned how the operator plans to incentivize customers to make the leap to fiber, given the planned cable upgrades and expected fiber installation costs of £200 to £300 per customer.
“The real question is then what comes next to take FTTP to the end-customer, as initially this will not be a forced migration, but will be ‘success based’ and will be led by customer demand,” New Street’s James Ratzer wrote. “Given Virgin’s DOCSIS3.1 network should be able to offer speeds of up to 2 Gb/s, we would expect the migration to full FTTP will be very slow and will easily extend well into the 2030s before any kind of forced migration or HFC shutdown is considered.”
The company, which launched in June, added 35,700 broadband subscribers in Q2. It grew its fixed-line customer base to 5.68 million, with 5.5 million of these broadband connections. More than 40% of its broadband subscribers also have contract mobile service with the operator.
It posted a net profit of £252.4 million (approximately $352.4 million) and consolidated revenue of £2.55 billion ($3.56 billion). Fixed revenue came in at £1.04 billion while mobile revenue stood at £1.4 billion.