UK Altnets: Something's got to give
Altnet losses expanded to £1.5bn in 2024, as EBITDA losses persisted and interest costs rose sharply, with ARPUs weakening and operating costs stubbornly high, and the increasing interest burden looking unpayable under any reasonable scenario.
Even the best performing altnets can barely make EBITDA breakeven, and not make sufficient margins to cover ongoing customer acquisition investment, resulting in a perpetual cash drain for their investors.
The impact on the rest of the sector is worsening in the short term as pricing falls, but this should accelerate the inevitable consolidation into a sustainable wholesale model under CityFibre and/or VMO2/nexfibre.
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Competition intensifies: UK broadband trends Q2 2025
4 September 2025Broadband market revenue dipped back into negative territory in Q2, due to pricing pressure on both existing and new customers.
CityFibre’s capital raise puts it in pole position for altnet consolidation, while TalkTalk’s will enable it to compete much more effectively in the retail space.
Fierce competition is likely to continue unless and until retail altnets do the rational thing and consolidate into a wholesale model.
CityFibre has announced that its long-awaited £1.5 to £2.3 billion financing round is finally agreed, with it now able to use this money to fund its remaining organic build, integrating acquisitions, and covering operating losses until it reaches cashflow breakeven.
This capital raise will not be the first of many across the altnet sector in our view, as CityFibre’s business model is unique, and now partially dependent on the struggles of others to encourage consolidation.
CityFibre now has all the pieces in place to accelerate consolidation of the altnet sector, which will ultimately benefit the whole sector in ending unsustainable retail altnet competition.
Sky has officially launched on CityFibre’s network, offering up to 5Gbps speeds, which may have more of a halo effect for Sky than driving direct adoption of these very high end packages.
Sky is critical to CityFibre’s wholesale model given its size, and it is a good sign that Sky is proving an enthusiastic wholesale customer, while it is likely to be wary of others.
CityFibre still needs to complete its planned financing round to kick off a wholesale-focused consolidation wave, which would ultimately be beneficial to all incumbents in ending irrational price competition from retail altnets.
Altnets in the UK: Consolidation endgame
26 June 2025The largest UK altnets are now all at or close to EBITDA positive, but still heavily cashflow negative even pre-interest costs and with paused builds, due to various below-the-line cash costs requiring continuous funding. EBITDA margins of as much as 35%+ are required to actually be cashflow breakeven.
Altnet economics are still challenging even if debts are fully written off, with a payback of more than 5 years on customer acquisition and connection costs alone.
The consolidation endgame is increasingly imminent, with the outcome likely to be a mix of CityFibre/VMO2 acquisitions, stand-alone niche players continuing, and abandoned assets, with the outcome for the rest of the sector more benign under any scenario than current trends.
Competition intensifies: UK broadband trends Q2 2025
4 September 2025Broadband market revenue dipped back into negative territory in Q2, due to pricing pressure on both existing and new customers.
CityFibre’s capital raise puts it in pole position for altnet consolidation, while TalkTalk’s will enable it to compete much more effectively in the retail space.
Fierce competition is likely to continue unless and until retail altnets do the rational thing and consolidate into a wholesale model.CityFibre has announced that its long-awaited £1.5 to £2.3 billion financing round is finally agreed, with it now able to use this money to fund its remaining organic build, integrating acquisitions, and covering operating losses until it reaches cashflow breakeven.
This capital raise will not be the first of many across the altnet sector in our view, as CityFibre’s business model is unique, and now partially dependent on the struggles of others to encourage consolidation.
CityFibre now has all the pieces in place to accelerate consolidation of the altnet sector, which will ultimately benefit the whole sector in ending unsustainable retail altnet competition.Sky has officially launched on CityFibre’s network, offering up to 5Gbps speeds, which may have more of a halo effect for Sky than driving direct adoption of these very high end packages.
Sky is critical to CityFibre’s wholesale model given its size, and it is a good sign that Sky is proving an enthusiastic wholesale customer, while it is likely to be wary of others.
CityFibre still needs to complete its planned financing round to kick off a wholesale-focused consolidation wave, which would ultimately be beneficial to all incumbents in ending irrational price competition from retail altnets.
Altnets in the UK: Consolidation endgame
26 June 2025The largest UK altnets are now all at or close to EBITDA positive, but still heavily cashflow negative even pre-interest costs and with paused builds, due to various below-the-line cash costs requiring continuous funding. EBITDA margins of as much as 35%+ are required to actually be cashflow breakeven.
Altnet economics are still challenging even if debts are fully written off, with a payback of more than 5 years on customer acquisition and connection costs alone.
The consolidation endgame is increasingly imminent, with the outcome likely to be a mix of CityFibre/VMO2 acquisitions, stand-alone niche players continuing, and abandoned assets, with the outcome for the rest of the sector more benign under any scenario than current trends.