The latest sign of this shift comes as London-based ISP G.Network has reportedly instructed investment banks Jefferies and Nomura to explore potential buyers for the company once again.
“With the fibre ‘gold rush’ over, consolidation is widely anticipated as an inevitable part of the sector’s outlook, even if the ‘endgame’ and the pace of change are still unclear,” said James Robinson, senior analyst at Assembly Research.
He noted that major players like Virgin Media O2’s NetCo and CityFibre are positioning themselves as consolidators, but the exact trajectory of market mergers remains uncertain.
“As such, there is definite uncertainty about the exact path the consolidation journey will take, and whether there will be a wave of consolidation involving various distressed assets or an orderly sequence of deals similar to Netomnia/Brsk, for example.”
G.Network’s challenges mirror those faced by many alternative networks (altnets). Originally planning to expand its full-fibre broadband network to 1.3 million London premises by 2026, the company has been hindered by rising build costs, high interest rates, and increasing competition from both rival altnets and incumbent operators.
By March 2024, G.Network’s latest accounts showed it had reached 416,000 premises, with 361,000 classified as “connectable” under Ofcom’s Connected Nations definition. However, independent estimates suggest only 252,000 are “Ready for Service".
Robinson pointed out that competition in London’s fibre market is particularly fierce, with G.Network operating alongside rivals such as CommunityFibre, Hyperoptic, Openreach, and Virgin Media’s nexfibre.
“Like many altnets, G.Network’s market position is challenged by factors such as intense competition, rising costs, softer-than-hoped adoption, and increasing overbuild,” he said.
Despite these pressures, G.Network has continued to receive financial backing from its primary investor, USS, which provided £85m in June 2024 and up to an additional £150m in 2023. However, the future extent of USS’s support remains uncertain, adding to speculation about a sale.
According to G.Network’s most recent accounts, the company saw turnover increase by 85% to £10.2m in FY2024, with a gross profit of £7.3m (up 62%).
However, it remains unprofitable, recording an operating loss of £52.8m, albeit an improvement on the previous year’s £67.2m loss.
The company has recently pivoted its focus from expansion to commercialisation, a move that could enhance its appeal to potential buyers.
In the past week, G.Network’s bankers have reportedly reached out to at least ten other altnet operators regarding a potential takeover.
This follows a previous, unsuccessful attempt to find a buyer last year. While no firm offers have been confirmed, Robinson suggested that CityFibre could be a potential suitor.
“CityFibre has positioned itself as a potential main aggregator of smaller altnets, although any future M&A activity will hinge on it resolving outstanding funding questions.”
Looking ahead, Robinson believes that consolidation among altnets is highly likely, particularly where networks do not overlap and customer bases can be acquired efficiently.
“Consolidation will make sense in several situations, such as if networks don’t overlap, there’s a distressed asset involved, or if an acquisition means also acquiring a customer base,” he said.
However, he cautioned that mergers involving duplicate infrastructure may be less attractive if they fail to bring in new revenue streams.
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