Virgin Media O2 owners to challenge UK regulator over Netomnia deal

LONDON, Oct 20 (Reuters) - Virgin Media O2's owners will challenge Britain's competition regulator's opposition to their £2 billion ($2.7 billion) acquisition of fibre network Netomnia rather than offer remedies to address its concerns, they said on Tuesday.

• The Competition and Markets Authority said earlier this month that Nexfibre's acquisition of Netomnia could substantially reduce competition, and it would have preferred rival CityFibre to buy the network.

• Nexfibre, a joint venture between Virgin Media O2's co-owners Liberty Global and Telefonica and infrastructure investor InfraVia, agreed in February to buy Netomnia, Britain's second-largest alternative fibre network operator.

• Nexfibre said it had decided not to submit any possible remedies to address the CMA's concerns and would instead challenge the regulator's reasoning.

•  "The CMA's Interim Report is fundamentally flawed. Its conclusions rely on counterfactuals that do not reflect the commercial and financial reality of the UK fibre market," Nexfibre said.

• "In particular, the assumption that CityFibre will acquire Netomnia is not a credible basis on which to judge this transaction. Nor is the assumption that the billions of pounds of investment enabled by this deal would simply happen anyway."

• The CMA said a combination of CityFibre and Netomnia would have created a stronger challenger to market leader BT's Openreach network and the enlarged Nexfibre/Virgin Media O2 business.

• CityFibre said it was credible. A spokesperson said: "The CMA has already examined CityFibre in detail and is well aware of our financial position, intentions to recapitalise and of the new £900m contribution from our shareholders."

($1 = 0.7489 pounds)

(Reporting by Paul Sandle; editing by William James)