Virgin Media and TalkTalk are discussing the idea of a passive infrastructure sharing deal that could potentially strengthen both companies' UK broadband offering.
A report has been published in the Telegraph, citing unnamed industry sources, claiming that the two internet service providers are looking into the potential benefits of a deal that would allow TalkTalk to lay fibre optic cables in Virgin Media's underground ducts, and vice versa.
In theory, an arrangement of this kind could be advantageous for both companies, with this move likely to bolster TalkTalk's ambition to evolve from a reseller of BT broadband lines into an independent network owner in its own right.
Following a recent £1.5 billion deal with M&G, TalkTalk is working to deliver ultrafast broadband via fibre-to-the-premises to more than three million locations in mid-sized UK towns and cities. Piggybacking on the Virgin Media network in this way could drastically cut the costs of doing so by reducing the need to dig up pavements and minimising civil engineering costs.
Meanwhile, Virgin Media could also benefit from the deal by utilising TalkTalk's existing capabilities to accelerate Project Lightning, a large-scale expansion of its ultrafast broadband network. The company was able to attract an additional 31,200 broadband subscribers between January and March 2018, and hopes to build on this momentum by extending its network to an additional four million premises by the end of 2019 or 2020.
At present, the majority of TalkTalk's broadband ISP services are founded upon BT's national Openreach copper and fibre optic network, meaning that a link-up between Virgin Media and TalkTalk would create new competition for BT. However, the Telegraph report observed that these talks remain "at an early stage and may not lead to a deal".
Of note is the fact that Virgin Media's parent company Liberty Global has typically opposed infrastructure sharing deals in other countries to protect its cable investments; moreover, Virgin Media and TalkTalk previously proposed a joint bid for funding from the government's Broadband Delivery UK scheme in 2011, but this never came to fruition.