CityFibre is exploring raising even more capital as it mulls large-scale consolidation of the UK fibre sector including a potential acquisition of Netomnia.

CityFibre, which is backed by infrastructure investors including Antin and Goldman Sachs’ asset management arm, has been holding talks with Netomnia for some months, sources said, although it was unclear how advanced the talks were.

An acquisition of Netomnia, which last month said it had 2.8 million premises “serviceable”, would be a major addition to CityFibre, which is already the UK’s largest “altnet” challenging incumbents BT Openreach and Virgin Media O2 in the rollout of full fibre networks in the UK. CityFibre earlier this month said it was passing more than 4.6 million premises across the UK.

While CityFibre in July announced a GBP 2.3bn financing, including a GBP 800m accordion facility “to finance the company’s M&A pipeline”, it is exploring further capital raising to give it even more firepower for acquisitions, the sources said.

CityFibre declined to comment. Netomnia, which is backed by US investor DigitalBridge and Mauritius-based digital infrastructure investor Advencap, did not respond to a request for comment.

A CityFibre-Netomnia merger would create a major rival to Openreach, which is the biggest player in UK full fibre, with more than 20 million premises passed and VMO2, which alongside its nexfibre joint venture with infrastructure investor InfraVia, covers more than 7 million premises.

On a smaller scale, CityFibre is also continuing to hold talks with toob, sources said. Infralogic in July reported that it had been in talks with the Amber Infrastructure-backed fibre network operator, as well as with Aviva Investors’ Truespeed, Octopus Investments’ Fern Fibre and Asterion Industrial Partners’ MS3.

Toob declined to comment.

CityFibre and toob, which has more than 200,000 premises passed in various parts of England and Scotland, already have a wholesale agreement, under which CityFibre’s wholesale customers have access to the toob network and toob’s internet service provider (ISP) has access to CityFibre’s in some areas.

CityFibre is a pure wholesaler, meaning it does not operate its own ISP but makes its network available to other ISPs dealing directly with householders and business customers.

While Netomnia is part of a group led by chief executive Jeremy Chelot that also includes ISP YouFibre, the two businesses have been separated, leaving Netomnia as wholesaler. One of the sources noted that this makes it easier to combine Netomnia with CityFibre because it would enable CityFibre to continue as a pure wholesaler.

Consolidation is already underway in UK fibre, albeit at a slower pace than some had predicted. The biggest deal so far measured by the size of the smaller party was the merger last year of brsk, with around 500,000 premises passed, with Netomnia, which at the time passed around 1 million premises.

CityFibre has also been active, earlier this year acquiring PATRIZIA-backed Connexin’s full fibre network covering some 185,000 premises in and around Hull in Yorkshire. In line with CityFibre’s wholesale model, the deal excluded Connexin’s ISP.

While this deal resulted in PATRIZIA becoming a small shareholder in CityFibre, one of the sources noted that Netomnia’s shareholders are likely to have a preference for a deal with a large cash component.