Virgin O2 seals deal to acquire Upp, a Russian-backed broadband provider

Virgin Media O2 has reached an agreement to purchase Upp, a broadband provider with Russian backing. This acquisition is significant as it fulfills Britain’s demand for Upp to be sold last year due to security concerns.

Upp, known for its fiber internet services in the East of England and the East Midlands, was previously owned by Luxembourg investment manager Letter One, a group supported by Russian oligarchs.

Among the backers of Letter One is Mikhail Fridman, the billionaire co-founder of conglomerate Alfa Group, who faced UK sanctions following Russia’s invasion of Ukraine.

In December of last year, the UK Government instructed Letter One to divest Upp, citing concerns that the ownership of the company posed a risk to national security.

While the exact purchase price for Upp has not been disclosed by Virgin Media O2, it is believed to be valued at less than £100 million.

Virgin Media O2 intends to sell Upp to a joint venture called Nexfibre within the next year.

Upp specializes in “alternative networks” and serves around 4,000 customers, providing broadband services to approximately 175,000 locations in England.

Lutz Schuler, the CEO of Virgin Media O2, stated that the company has a clear strategy to become the leading challenger in the country’s fiber market.

Virgin Media O2 is the result of a merger between US group Liberty Global and Spain’s Telefonica.

Matthew Howett, from Assembly Research, commented, “The announcement could potentially trigger further acquisitions of alternative network providers by larger industry players.”