scte long read
“Consolidation isn’t happening as funding isn’t happening because subscribers aren’t happening.”
acquired Lit Fibre and integrated its footprint of around 280,000 premises into our network in less than seven months.” He concluded, “Some of the altnets are merging to achieve scale and acquisition is part of our “build and buy” strategy, enabling CityFibre to pass more than 8m premises sooner rather than later. It’s a sensible and deliberate strategy that will see CityFibre cement its position the UK’s third national network.” But over the course of researching this piece it seems clear that the ‘known knowns’ for these pioneers have been upended by a multitude of ‘unknown unknowns’, to reluctantly quote Donald Rumsfeld, that in a new market couldn’t have been easily anticipated. Chapeau It is worth pausing to acknowledge the scale of the altnets’ achievements over the last few years. Given that the boom time occurred during (and arguably because of) the worst pandemic in 100 years, accessing homes, investment, even each other was challenging, to say the least. While the rest of us put our feet up and the television on, altnets were digging holes and erecting poles amid scant PPE and strict social distancing guidelines; the longer lockdown went on, the greater our demand for broadband and the shorter our patience became when it didn’t all work seamlessly. One of the great unsung heroes of the COVID-19 crisis, unlike the NHS (which by contrast was very much sung, every week by clapping with our neighbours on the street), the broadband providers who quietly facilitated our lockdowns have never been given much credit, so take a bow. - Mike Surrey, Chair, Alncom
the industry then to get going. However, even now the rate of consolidation is slower than experts predicted. According to a report published in October last year by James Barford, analyst at Enders Analysis, “the UK altnets collectively lost over £1bn in 2023, with most metrics unrealistically distant from what they need to be for a sustainable model, particularly the smaller retail-focused operators.” This seems completely at odds with the chirpy engineer in a natty uniform snipping cables at your door, telling you how busy he is. What’s happened? This is a deep dive into the reasons why. Jazz hands There are good news stories to counter the dismal industry reports; press releases featuring happy and relieved execs shaking hands in front of branded transit vans are a fairly regular occurrence, and many have exited the industry wealthier than when they started, knowing they did connect homes and transform lives, something that this industry takes great pride in – the social good of connectivity is more of a motivator than becoming a millionaire overnight. Which is just as well. A case in point is CityFibre, market leader currently with a 12% share and rarely out of the industry press. “2025 is a key year for the industry,” Clayton Nash, Strategy Director, told Broadband Journal. “CityFibre’s full fibre network now reaches more than 4m homes and businesses and our target of connecting more than 8 million UK premises remains on track. We are looking at the opportunity that consolidation offers, having successfully
Over the last few years the altnet market has morphed from one of excitement and anticipation, investment pouring in, breathy endorsements by a revolving door of DCMS ministers with the Project Gigabit programme granting both funding and credibility to a nascent market, a market characterised by engineers with big dreams of homes passed and perhaps retiring early. It was something of a goldrush period – build quickly, acquire territory, take a risk, book early to avoid disappointment. Over the last 10-15 years an estimated 100-130 altnet companies set up shop in competition with the incumbents, Openreach and Virgin Media, in response to complaints that those incumbents apparently couldn’t or wouldn’t connect towns and villages considered not financially viable at the time. Since then, many of those altnets have evolved from kitchen table start-ups to sophisticated SMEs funded by venture capital, variously offering apprenticeships, in- house training, community outreach programmes (digital inclusion, bridging the digital divide etc), 24-hour helplines and a career path in broadband. You will have seen them driving around your town in brightly coloured, branded vans, putting flyers through your door. A market matures, a market falters Like all new markets, consolidation is a welcome indicator of a market beginning to mature. If anything, the chatter in 2021 around consolidation seems premature now, and it has taken another couple of years for the consolidation expected by
MARCH 2025 Volume 47 No.1
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