UK ‘altnets’ raise more capital as financing deals heat up
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Alternative network providers Fibrus and Community Fibre have secured new debt funding as part of a series of funding deals in the sector, as smaller firms race to deploy full fibre to challenge incumbents BT and Virgin Media O2.
Northern Ireland and Cumbria broadband Provider Fibrus raised £100m in August while London-based network Community Fibre raised £60m in May, the companies told the Financial Times.
The so-called altnets have attracted billions of pounds in funding but have been squeezed over the past 18 months amid higher borrowing costs and pressure from backers to recoup their investments. Their attention has been turn to win customers, after some companies were forced to pause deployments, cut jobs and consolidate.
However, the sector has recently struck a series of deals and was boosted last week by altnet leader CityFibre announced a partnership with Sky.
Dominic Kearns, founder and chief executive of Fibrus, told the FT that “accomplishing this target is incredibly important to us as fibre funding is currently facing many challenges in the market”.
The biggest issue in the equity and bond markets is the lack of near-term profitability visibility for many of its peers, he added, but Fibrus expects to achieve positive earnings before interest, taxes, depreciation and amortization in 2025.
Fibrus, which expects to surpass 393,000 facilities and have 95,000 customers by the end of the month, will receive additional senior debt from existing lenders: UK Infrastructure Bank, contributing £55 million, as well as £25 million from financial institution ING and £20 million from German bank Landesbank Baden-Württemberg.
Community Fibre, which has now surpassed 1.3 million premises and is expected to exceed 300,000 customers by the end of this month, secured £60m in debt funding from new banks JPMorgan and Barclays as well as existing lender Landesbank Baden-Württemberg in May.
Chairman Olaf Swantee told the FT that this was due to “our unique network position in London and our very strong sales performance”. He added that the company had been Ebitda positive since April.
The pair join other alternative networks in announcing further funding in recent months, such as Hyperoptic, which focuses on urban areas and received a £150m funding commitment from UKIB in July.
However, analysts remain skeptical about the industry’s sustainability without further consolidation.
James Barford, director of telecoms at Enders Analysis, said fundraising had “slowed significantly in 2024” and most alternative networks were “struggling with low take-up and high operating losses”.
Paolo Pescatore, founder and TMT analyst at PP Foresight, said while the additional funding sounds positive, “there are still too many alternative networks chasing small amounts of money.”
The interest rate cut However, he added that this month has brought “a little more optimism and certainty” to the sector.
Other alternative networks that secured additional funding included Yorkshire-based Quickline Communications in August, Cornwall-based Wildanet in July and both London-based G. Network and Voneus, which focus on hard-to-reach communities, in June.
