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.

Fixing an allocation quirk at BT pushed UK broadband revenue back into growth in Q1, albeit a very modest 0.8%, thanks to continued altnet growth and a very weak underlying market.

Broadband pricing is dipping down overall, but there is not yet evidence of pricing cuts targeted in altnet areas, a massive missed opportunity in our view.

The market will remain under pressure in the short term, but in the longer term altnet pressure will fall under all realistic consolidation scenarios.
 

After four failed broadcast licence deals over five years, France’s top football league will launch its own subscription service in August.

In the short-term, consumer take up will critically depend on bundling arrangements with third-party platforms.

Longer-term, the league will need to establish lasting partnerships. Outdated competition rules are an obstacle, but the Dutch model is worth considering.

The 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.
 

As Ligue 1 seeks yet another broadcast arrangement for next season, the French league’s value is expected to erode further.

Outside the UK, the value of major leagues’ live rights are trending downwards. The Champions League—now sold by Relevent—is the silver lining, seeking to sign up a streamer.

Global streaming platforms have a growing appetite for sports rights—but European leagues need patience.

The French league and DAZN have come to an agreement to end their media rights contract after one season, with the league now having had four main broadcast partners in five years.

DAZN claims the league failed to protect its ‘exclusivity’, resulting in high piracy. Ligue 1 blames poor execution.

Without a main broadcast partner for next season, Ligue 1 is exploring the idea of creating its own direct-to-consumer service.

The mid-sized UK altnets Zzoomm and FullFibre have agreed to merge, in what looks like an all-share merger of (nearly) equals, both of whom have been struggling to raise finance.

Why did they pick each other rather than the larger CityFibre/Netomnia/nexfibre options? Valuation may have been the key factor, but it has left them still vulnerably low scale with further consolidation necessary.

Much more consolidation is required for the sector to be sustainable in our view, and further financial distress may be required for realistic valuations to emerge.

Canal+ is listing in London amid earnings and revenue growth and having shown a capacity to partner with global streamers in its core markets.

Investment in local 'tentpole' content—films, series and sports—ensures Canal+’s appeal to consumers and attractiveness to aggregation partners.

Significant growth and synergy opportunities lie in the turnaround of MultiChoice (in Africa), Viaplay (in Scandinavia) and Viu (in South-East Asia).

Under financial stress, most streaming platforms are increasingly focusing on third-party distribution. Thanks to bundling, top streamers like Netflix can increase the lifetime value of subscribers, while smaller streamers widen their reach.

Bundles of streamers may have some potential in the US, but in Europe—with Netflix not interested—they do not have the necessary scale.

This trend towards bundling favours incumbent pay-TV aggregators like Sky and Canal+, but in the longer run they face competition from tech video marketplaces.

UK football rights values have pulled further away from European peers in a stagnant market, as telcos have withdrawn and tech companies remain selective bidders.

Sky and Canal+ have tied down key contracts until towards the end of the decade, while DAZN now has domestic rights for four of the top five European football leagues.

Tech players want live sport, but have distinctive demands and without new monetisation models they will not challenge pay-TV incumbents.