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 Outdated competition rules are an obstacle, but the Dutch model is worth considering.

In a soft market for both consumer and B2B, service revenue trends continue to be dominated by in-contract price increase dynamics.

VodafoneThree’s launch signalled a cautious tone about prospects for mobile growth, presumably allowing for a degree of integration disruption.

VodafoneThree and VMO2 traded 79 MHz of usable spectrum, leaving VodafoneThree in a strong position spectrum-wise, albeit with some challenges given that its merger conditions reduce flexibility in its coverage approach.

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 slowdown in telecoms traffic volume growth post-pandemic has persisted for far longer than a simple hangover effect would imply, and has spread from fixed broadband to mobile in many markets

The eventual emergence of the metaverse and/or AI-generated traffic may mitigate this trend, but it is hard to see growth ever returning to a sustained 30%+ per annum level, with around 10-15% likely to prove the new normal

While far from disastrous for telcos, it does have important implications, such as the need to structure pricing more carefully, focus on network quality over capacity, and be more wary of the threat (or opportunity) from MVNOs, FWA and satellite

VMO2 reported solid financials in Q1, with revenue and EBITDA growth both improving and both (just) ahead of full year guidance.

Subscriber momentum however was poor across fixed and mobile, despite customer service improving, with broadband in particular likely to get worse as network buildout slows.

Meeting full year guidance is still achievable, but will likely require a significant altnet slowdown sooner rather than later in the year.

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.

Service revenue growth remained firmly negative at -1.0% in spite of inflation of +2.1%, as competition remains intense and pricing power weak.

Operators are guiding to a 2025 EBITDA performance that is broadly in-line with, or weaker than, their 2024 performance, with SFR choosing to abstain from guidance this year.

In-market consolidation cries are getting louder, with France, Italy and Germany the most obvious candidates.