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Alternative Network Providers Secure Funding to Challenge Incumbents

The UK’s alternative network providers (altnets) have secured significant funding deals to accelerate their rollout of full-fiber networks, posing a challenge to traditional providers BT and Virgin Media O2.

New Debt Financing Deals

Northern Ireland-based Fibrus has raised £100mn in August, while London-based Community Fibre secured £60mn in May. These deals demonstrate the resilience of the altnet sector, despite higher borrowing costs and pressure from backers to recoup their investment.

Background

The altnet sector has attracted billions of pounds in funding over the years, but has faced challenges in recent times. Many altnets have had to pause their rollouts, cut jobs, and consolidate in response to the difficulties.

Recent Developments

The sector has recently notched up a series of deals, including a partnership between CityFibre and Sky announced last week. Fibrus has stated that it will receive additional senior debt from existing lenders, including the UK Infrastructure Bank, ING, and Landesbank Baden-Württemberg.

Community Fibre, which has passed 1.3mn premises and expects to exceed 300,000 customers by the end of the month, secured debt financing from new banks JPMorgan and Barclays, as well as existing lender Landesbank Baden-Württemberg.

Altnets’ Focus on Customer Acquisition

The sector has turned its attention to winning customers, with Fibrus and Community Fibre expecting to pass 393,000 premises and have 95,000 customers by the end of the month, respectively.

Experts’ Views

While some experts are optimistic about the sector’s future, others remain sceptical. James Barford, director of telecoms at Enders Analysis, notes that fundraising has slowed in 2024 and that most altnets are struggling with low take-up and high operating losses.

Paolo Pescatore, founder and TMT analyst at PP Foresight, suggests that there are still too many altnets chasing too few pounds, but notes that the recent interest rate cut has provided some optimism and greater certainty for the sector.

Other Altnets Secure Funding

In recent months, other altnets have also secured funding deals, including Quickline Communications, Wildanet, G. Network, and Voneus.

Conclusion

The alternative network provider sector has secured significant funding deals, paving the way for further growth and competition in the UK broadband market. While challenges remain, these developments suggest that the sector is well-positioned to continue challenging traditional providers and improving connectivity for UK consumers and businesses.

FAQs

Q: What is an altnet?

A: An altnet (alternative network provider) is a telecommunications company that provides internet, phone, and TV services using its own infrastructure, rather than relying on traditional providers.

Q: Why is the altnet sector important?

A: The altnet sector is important because it provides an alternative to traditional providers, promoting competition and innovation in the market. Altnets are also driving the rollout of full-fiber networks, which will bring faster and more reliable internet connectivity to millions of UK premises.

Q: What are the challenges facing the altnet sector?

A: The altnet sector faces challenges such as higher borrowing costs, pressure from backers to recoup their investment, and low take-up rates. Despite these challenges, the sector has shown resilience and is continuing to grow.

Q: What is the future outlook for the altnet sector?

A: The future outlook for the altnet sector is uncertain, but recent funding deals and partnerships suggest that the sector is well-positioned for further growth. Experts remain sceptical about the sustainability of the sector without further consolidation, however.

Author: www.ft.com

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