Liberty Global’s Virgin Media operation in the UK is rumored to be buying the consumer WiFi operation of broadcast infrastructure player Arqiva – better known for managing DVB-T broadcast multiplexes and towers, including mobile base station masts and small cell locations.
Arqiva has made foray after foray into consumer facing businesses, but has had little commercial success to date. It acquired the WiFi operation in 2012 when it bought Spectrum Interactive for £23.4m ($30.6m), which at the time had 15,500 hotspots in 2,100 locations – mostly in hotels, restaurants, leisure outlets and airports.
Today it is described as having 27,000 hotspots, so has added 11,500 in four years, in 100,000 hotel rooms, 61 airline lounges and 35 airports, and all of these are in the UK.
Liberty Global has been putting together a strategy for WiFi offload when used in conjunction with mobile devices, to establish WiFi-first phone services, but like Comcast in the US, which already has 13m hotspots, it has been slow to come to market with a clear, unambiguous strategy.
Both seem to be in the process of building out hotspots, and simply letting existing broadband customers use them for free, and inviting passing customers to sign up for money. The broader appeal of cut priced mobile, augmented with WiFi, has not yet been unleashed by either of these cable operators, although that strategy was seen in France.
So this is just yet another example of simply muscling up in WiFi, and still not turning that advantage into a compelling proposition. In the UK however, Liberty Global does not have things its own way. We estimated that Virgin had already converted some 1.1m of its 4.8m broadband homes into homespots – a hotspot based on a home gateway with a second, open SSID. Across its footprint, mostly in Europe, Liberty Global has 7m of these hotspots prepped for a mobile assault.
It also has other pure hotspot build-outs, including those Virgin built out for the 2012 Olympics in 150 London Underground stations. In the UK Virgin has 3m mobile subscribers, but this represents just a few percent in a market where there are 91.5m active mobile phones.
The big problem in the UK is that other operators have greater WiFi assets with BT operating about 5.4m homespots through its relationship with FON, and 300,000 genuine hotspots, through partnerships with site owners.
Sky has acquired the Cloud, which claimed to have 20,000 hotspots in the UK, and both Sky and TalkTalk have a similar number of broadband subscribers (5m and 4m) to Virgin, with almost all of these having WiFi, and so can build out homespots of their own.
Arqiva for its own part has promised to get out of non-core businesses as it develops an IoT strategy around the connecting of smart meters for both electricity and water supply, and its support for a Sigfox IoT network. In short it would rather spend its money on infrastructure with a clear monetization plan, than WiFi.
Neither Virgin Media nor Arqiva had confirmed discussions or the existence of a deal.
Back in 2012 Arqiva also acquired a streaming TV business, Connect TV which was to use one of the YouView channels to gain market access – another project that never worked out. Prior to that in 2009 it had bought the Kangaroo VoD project from the BBC and tried to launch it as a service, subsequently renaming it Seesaw and then trying to sell it before closing the service down. Arqiva is itself a shareholder and member of both Freeview and YouView.
Its latest figures show that Arqiva continues to be exceptionally profitable with pretty stable revenues, so this sale, if it happens, will not be a steal for Virgin, and it will have to pay the full going rate for the assets.
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