The Statistic at the Heart of the CMA's nexfibre / Netomnia Probe

Inside the Numbers: Why the CMA's Phase 2 Probe of Nexfibre-Netomnia Comes Down to One Statistic

When the Competition and Markets Authority pushed Nexfibre's proposed takeover of Netomnia into a Phase 2 investigation, it wasn't a bureaucratic reflex. Phase 2 referrals are relatively rare in the UK Altnet sector as most fibre consolidation to date has cleared in a matter of weeks at Phase 1.  This one didn't, and the reason sits in a single piece of competition-law math: the Herfindahl-Hirschman Index, or HHI.

Working out that number credibly requires data most people never see: precise, postcode-level overlap figures for every operator, not just the "premises passed" totals in press releases. That's what Point Topic's broadband graph provides. A single model connecting networks, technologies, operators, coverage, and demographics across the UK market, mapping exactly where networks physically overlap. That's the granularity an HHI calculation depends on, and what's largely missing from public commentary on this deal.

Using that data, here's what HHI is, what it shows for this specific merger, and why the market you measure it against changes the story entirely.

What HHI Actually Measures

HHI is the standard tool competition regulators - the CMA, the US FTC and DOJ, the EU Commission - use to quantify how concentrated a market is. The calculation is simple: take each competitor's market share as a percentage, square it, and add up the squares. A market with one dominant firm produces a huge number (a pure monopoly scores 10,000); a market split evenly between many small players produces a low one.

The CMA applies rough thresholds to interpret the result:

• Below 1,500 - unconcentrated, minimal merger concern

• 1,500–2,500 - moderately concentrated, scrutiny warranted

• Above 2,500 - highly concentrated, mergers presumed problematic

• Above 3,000, with an increase of 200+ points - treated as a serious competition concern

• Above 5,000 - extreme concentration, very hard to clear without major remedies

The change in HHI caused by a merger - the "delta" - matters as much as the absolute number. A market that's already concentrated but barely moves after a deal tells a different story from one where a merger itself is pushing concentration into dangerous territory.

The Number That Triggered Phase 2

Restricting the analysis to the largest nationwide Altnets (CityFibre, Hyperoptic, and Gigaclear) in competition with nexfibre and Netomnia, the picture is stark.

Before the merger, five players split the market reasonably: CityFibre led with roughly a 35% share, followed by Netomnia (~27%) and nexfibre (~22%) as independent operators, with Hyperoptic and Gigaclear rounding out a competitive fringe. That produces an HHI of 2,580 - already into "highly concentrated" territory, but not unusual for an infrastructure sector this early in its build-out.

After the merger, the market drops from five real competitors to four, and most critically, the second and third players combine into a new one. CityFibre remains at roughly 36%, but the merged Nexfibre-Netomnia entity now holds 47.5% of the Altnet wholesale market outright. The resulting HHI: 3,702, a jump of over 1,100 points (Figure 1).

Figure 1:  UK Altnet Wholesale FTTP Market Concentration, Before vs. After nexfibre and Netomnia merger. Source: Point Topic.

That single 1,100-point increase is more than five times the CMA's 200-point screening threshold for merger concern, and the post-merger figure itself sits well past the 3,000 mark the CMA treats as a serious red flag. Put plainly: this deal doesn't just nudge an already-concentrated market, it converts a five-player field into a straightforward duopoly, with the top two players controlling 83.5% of Altnet wholesale FTTP between them.

Table 1: Wholesale Altnet suppliers market share and HHI change pre/post nexfibre and Netomnia scenarios. Source: Point Topic

The Sensitivity Case: What If You Include Openreach?

Here's where the analysis gets more interesting, and where nexfibre's own defence is likely to focus. Openreach still passes roughly 22.5 million premises across the UK, dwarfing every Altnet combined. If you fold Openreach into the same market definition, the picture changes substantially:

• Openreach alone holds close to 66% of the total FTTP market

• The merged nexfibre-Netomnia entity shrinks to just 16%

• The overall HHI rises even further, to roughly 4,750, but that number is overwhelmingly a function of Openreach's pre-existing dominance, not this specific transaction

This is the sensitivity case the CMA will almost certainly examine, and it cuts in the merging parties' favour if it's the framing that wins. nexfibre's lawyers will want to argue: how can a company controlling 16% of the real market be a competition problem, when the incumbent controls two-thirds of it?

Why the Narrower Market Is the One That Matters

Regulators don't typically define markets by whichever framing makes a deal look best; they look at where genuine competitive constraint operates today. ISPs sourcing wholesale fibre access to serve their own retail customers are, in practice, choosing between Altnets for coverage in areas where Openreach isn't necessarily the default or cheapest option. That's the competitive dynamic that actually changes when two of five Altnet suppliers become one.

Openreach's scale is real, but it was already priced into the market before this deal was ever proposed, and it doesn't get more or less dominant because nexfibre buys Netomnia. What does change, directly and measurably, is how many independent wholesale options an ISP has within the Altnet segment specifically. That number drops from three meaningful independents (CityFibre, Netomnia, nexfibre) to two (CityFibre and the merged entity).

Expect the CMA's Phase 2 assessment to centre on the narrower Altnet-only market as the primary competitive issue, with the Openreach comparison treated as useful context rather than the deciding frame.

What This Points To

An HHI increase this large, on a market this concentrated, rarely results in either an outright block or a clean, condition-free pass. The more probable outcome is conditional clearance - most likely paired with wholesale non-discrimination commitments toward independent ISPs, pricing safeguards in overlapping regions, or, in a firmer scenario, a mandated divestment of specific infrastructure to preserve a genuine third player in the market.

For anyone with a stake in UK fibre, investors weighing the deal's odds, ISPs negotiating wholesale contracts, or rival Altnets thinking about their own M&A prospects, the HHI math is the clearest signal available right now for how seriously the CMA is going to take this one.

Figures reflect UK Altnet wholesale FTTP premises-passed data as of July 2026. HHI is calculated as the sum of squared market shares (percentage points) across named operators in each defined market.