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Unpacking the Impact of UK Altnet Providers Merging

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An anonymous source this week leaked riveting news indicating a possible merger between two of UK’s principal alternative network providers. If this move is implemented, the resultant entity would see fibre-to-the-premise (FTTP) coverage for over one million premises.

While this buzz circulates, it has been suggested that the companies in question could consolidate their networks within a span of a month to six weeks. The rationale behind this harmonization seems fairly straightforward. A common investor unites these businesses–Adveap. Likewise, they share a rather synchronized approach to fibre deployment. Their primary focus is utilizing Openreach’s existing infrastructure as a cost-effective solution for deployment. Interestingly, their rollout strategies also mesh nicely due to minimal overlap of operations.

Brsk has extended its FTTP to 450,000 premises, perpetuating major hubs in Birmingham, Manchester, Bradford, Rochdale, Blackburn and Burnley. Alternatively, Netomnia has a wider spread of operations, reaching 850,000 premises all over the UK. The convergence of these two companies would have a significant impact on the UK’s broadband market, covering an estimated 1.3 million premises.

Over the past year, the UK fibre market has seen a shift towards consolidation. In spite of the speculation regarding Virgin Media O2 (VMO2)’s potential acquisition of CityFibre remaining unfulfilled, there was significant market activity. For instance, Trooli was acquired by Agnar UK Infrastructure, CityFibre bought Lit Fibre from Newlight Partners, and Upp was acquired in a joint venture with Nexfibre by Liberty Global and Telefónica, in conjunction with InfraVia Capital Partners.

Moreover, Fern Trading investment company kicked off a strategic reformation of some of its altnet investments— Giganet, Swish Fibre, Jurassic Fibre, and AllPoints Fibre, by consolidating them into a single entity trading under the Cuckoo brand. The market may continue to witness more such amalgamations throughout the year.

While altnets are grappling with tough economic conditions and low subscription rates for full fibre services, subscribers, on the other hand, find the switch to a new provider lengthy and challenging. Ofcom’s One Touch Switching (OTS) mandate was introduced to battle this issue. However, successful implementation has proven to be an uphill battle for companies like BT (Openreach) and VMO2, resulting in substantial delays.

Netomnia’s CEO, Jeremy Chelot, recently expressed his displeasure with Openreach and VMO2, suggesting that meeting Ofcom’s revised deadlines may prove unrealistic. Chelot is expected to voice his thoughts on this matter further at the upcoming Connected North conference in Manchester.

Bearing witness to the profound impact of consolidation on the UK’s altnet market, operators are slated for a panel discussion on this topic at this year’s live Connected North conference.

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