BT started its FY26 with robust financials. Revenue was slightly weak due to handsets and international, but EBITDA was slightly ahead of expectations, and operating metrics were strong.

The highlight was Openreach posting its lowest broadband line losses for over a year despite ongoing altnet pressure, and keeping revenue growth positive despite reduced inflationary price increases.

The altnet threat is still far from over, but it is encouraging that there are signs that it is beginning to wane as the sub-sector moves to a more rational 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.

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.
 

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.

Comcast is selling Sky Deutschland to RTL Group, for a €150 million cash consideration, but with a performance-dependent variable of up to €377 million

In a fluid but competitive German market, RTL vies for leadership

Having turned Sky Deutschland around, this divestment allows Sky to be much more focused on core regions with more diversified businesses

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.
 

On 3 June 2025, Enders Analysis co-hosted the annual Media and Telecoms 2025 & Beyond Conference with Deloitte, sponsored by Adobe, Barclays, Salesforce, Financial Times and SAS.

With over 700 attendees and more than 50 speakers from the TMT sector, including leading executives and industry experts, the conference focused on how new technologies, regulation, and infrastructure will impact the future of the industry.

This is the edited transcript of Session Three, covering: Vodafone’s strategy; BT’s strategy; the future of fibre; and challenges and opportunities for telcos.

Most regulations within the TAR26 condoc were continuations of the previous pro-investment regulations, albeit with little progress made on copper withdrawal, no extra help for the struggling altnets and a number of unexpected twists at the margin. 

Within the detail, the most significant hit is the return of cost-based price controls to some leased line charges, and across all of the proposed changes, Openreach has on balance fared worse than retail ISPs, albeit at a scale that is manageable within the BT Group.

Ofcom showed no inclination to offer any extra help to the struggling altnet industry, regarding its inefficiencies as being its own (and its investors’) problem, with consolidation the only sensible path forward for most.

The Berlusconi family-backed MediaForEurope’s (MFE) public offer may not be taken up by many ProSiebenSat.1 (P7) shareholders, but will allow it to raise its stake to above 30%.

Without a core shareholder, ProSieben has flipped-flopped through unsuccessful strategies to meet the digital transition challenge.

MFE believes that European commercial television must build cross-border scale to compete with global streamers.

The ‘big 4’ ISPs’ combined revenue remained in decline in Q4 2024 at -0.4%, partly due to a BT accounting quirk but mainly due to altnets gaining share

ARPU growth of 2% is roughly compensating for subscriber declines of 2%, but this ARPU growth is likely to weaken in 2025 as various boosts drop out

A recovery will come as the altnets slow in H2 2025 (if not before) due to their restrained expansion, which cannot come soon enough for the big ISPs