Upp

History

2023: Virgin Media O2 bought Upp

On September 6, 2023, the British telecommunications company Virgin Media O2 announced the conclusion of an agreement to acquire local Internet provider Upp from the international investment group LetterOne, associated with Russian businessmen Mikhail Fridman and Peter Aven.

In the current geopolitical situation, the British authorities in December 2022 demanded that LetterOne sell Upp, citing national security reasons. LetterOne, which is not under European sanctions, objected to this decision, but failed to maintain the asset.

British telecommunications company Virgin Media O2 announces agreement to acquire local internet provider Upp

Under the agreement, Virgin Media O2 will initially buy provider Upp and carry out work to integrate it. In the future, the asset will come under the control of the Nexfibre consortium formed by InfraVia and Liberty Global/Telefónica. The transaction is planned to be carried out entirely at the expense of funds. Financial conditions were not disclosed, but, according to sources in the Financial Times newspaper, we are talking about "tens of millions of pounds."

The Upp provider serves approximately 4,000 private and corporate users, and the coverage area is 175 thousand buildings in eastern Britain. As a result of the deal, Nexfibre is said to have a "quality regional fibre network" with low overlap to Virgin Media's existing O2 service area. It is planned to fully complete the transfer of the asset within 2024. In the future, Nexfibre intends to actively develop the network infrastructure: by 2026, about 5 million households will be covered by fiber, followed by an increase in the indicator to 7 million. Investments in the project are estimated at £4.5 billion (about $5.6 billion at the exchange rate as of September 8, 2023).^[1]

2022: British authorities demand LetterOne sell the company

The British authorities in December 2022 require the investment company LetterOne, created by the owners of Alfa Group, to sell the telecommunications operator Upp. This is due to the sanctions risks of LetterOne owners, although the investment company was not officially subject to sanctions.

2021: Attracting investment from LetterOne

In early June 2021, LetterOne an investment group controlled by a Russian billionaire Mikhail Fridman became a financial partner of the British telecom company Upp worth $1.4 billion. In particular, LetterOne agreed to fund the deployment of a fiber-optic network in England 1 million premises by 2025.

This plan will cost the company $420 million in equity, and the rest of the cost of $1.4 billion will be raised against debt. Equity funding was fully taken over by LetterOne, along with Upp's management team and board. The move is LetterOne's first investment in the UK broadband market. The group also owns other UK businesses such as the Holland & Barrett health food chain.

Mikhail Fridman invested in a British telecom company worth $1.4 billion

Niche broadband companies such as Upp are looking to quickly fill gaps in the country's telecoms network, where bigger and older companies BT and Virgin Media have failed to upgrade older lines. Investors including Oaktree Capital Management, KKR, Warburg Pincus, Macquarie and Goldman Sachs have collectively invested billions of dollars in smaller players to roll out the UK's broadband network.

In response, Openreach, BT's network arm, has accelerated its plans to upgrade fibre and doubled the number of rural homes expected to be connected soon. Virgin Media, which has merged with O2, has also said it wants to bring in financial partners to expand its high-speed network.

Meanwhile, Upp plans to create more than 600 new jobs during its operations to deploy and support the new network, as well as to provide new services to customers.^[2]

Notes