GlobalData research at the end of 2024 warned that the UK’s alternative broadband suppliers (altnets) are facing mounting challenges in competing with established telecom players, and that as the latter strengthen their positions, market consolidation appears inevitable.
In the first indication of this trend in 2025, wholesale full-fibre network provider FullFibre, along with its in-house ISP retail company BeFibre, has agreed to merge with full-fibre business operator Zzoomm.
The merger is subject to final documentation execution and regulatory approval, and closure is expected early in 2025. Indicating the state of the UK altnet business, in its UK ISP and network supplier metrics report for the second quarter of 2024, analyst Point Topic found altnets’ total consumer broadband base reached just over 2.06 million, up from two million in Q1 2024 and 32% (1.56 million) in Q2 2023. They recorded around 59,000 net additions down from around 70,000 in the previous quarter.
Yet the GlobalData study stated bluntly that despite substantial investments in infrastructure, many altnet operators struggle to achieve profitability, with limited market penetration and insufficient customer acquisition. It noted that although the number of FTTP altnets has shrunk from about 150 to 100 or so, very few are looking viable, and that having spent so much on infrastructure roll-outs, many have revenues only in the few tens of millions of pounds.
Operating across 29 market towns and small urban communities in England, Oxford-based Zzoomm is an established full-fibre network operator whose mission is to provide fibre-to-the-premises (FTTP) to underserved market towns where there is minimal or no existing access to a full-fibre network. The challenger brand’s modus operandi is to compete on customer service, quality of service and product reliability, and has more than 30,000 contracted customers and more than 200,000 ready-for-service properties.
For its part, expanding Devon-based national wholesale telecoms network provider FullFibre said its mission was a commitment to deliver gigabit infrastructure to those communities left behind by larger telecoms companies. The firm operates its network as a wholesale-only platform, aiming to supply full-fibre broadband coverage to more than 500,000 UK homes and businesses by 2025 while providing a competitive consumer marketplace for local and national internet service providers (ISPs).
The company said decreasing the digital divide between rural and metropolitan regions was key to creating equal opportunities across all regions in the UK, and that it is dedicated to increasing the speed and quality of broadband coverage across rural towns by installing high-speed telecoms equipment that is usually only connected across dense urban areas.
The new merged entity is said to combine two complementary networks and operating models, and the firms said that uniting will create significant opportunities to accelerate customer growth across a larger footprint, secure funding for new builds and future mergers, and achieve greater operational and financial efficiencies through economies of scale.
The enlarged group claims to have one of the largest full-fibre footprints, with some 600,000 properties ready for service and over 65,000 customers.
FullFibre said it will also be “well-positioned” for further M&A, better able to accelerate growth, enhance operational efficiency and lead on further opportunities across what is now a fragmented UK altnet sector. Additionally, the partnership will look to enhance wholesale services for ISPs, unlocking valuable new revenue streams.
Current Zzoomm CEO Matthew Hare is set to become executive chairman of the new firm, with FullFibre CEO James Warner becoming group CEO. The management teams from both companies said they had the relevant experience, expertise and resources to lead and develop the enlarged group faster, providing outstanding broadband services to consumers, businesses and wholesale markets.
“With our clear focus on serving happy customers with brilliant broadband, Zzoomm has delivered for a number of years industry leading organic growth across its network,” said Hare. “We have consistently stated our strategy is to grow organically and by M&A in this fragmented market. An enlarged business with the operational and financial infrastructure, benefitting from the economies of scale, as well as a management team with an exceptional track record, we will have an excellent platform to combine with other Altnets in the near future, as well as driving organic growth faster.”
“This merger represents another significant step in our journey,” he said. “With a shared commitment to delivering transformational full-fibre connectivity with exceptional customer experience, this deal strengthens our collective ability to grow even faster and seize new market opportunities.
Warner added: “For FullFibre, this is our second merger and another milestone in our mission to create a 21st-century digital backbone for the nation. Following our recent successful integration with Digital Infrastructure and BeFibre, this next merger further accelerates our ambitions to lead the market and provide unmatched connectivity to homes, businesses and wholesale partners alike.”
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