What is the Future for Altnets?

As the UK races toward nationwide full-fibre coverage, the landscape of alternative networks (Altnets) is rapidly evolving. With billions invested and competition intensifying, Altnets face a critical juncture. Will they scale, merge, or fade away?

Q. Is their evidence of more consolidation within the market?

Yes, consolidation is already happening. Recent mergers like Netomnia and Brsk are just the beginning of this trend. Popular opinion, suggests the Altnet market will shrink dramatically by 2030, with only 4 to 6 major players remaining.

“We’re seeing smaller Altnets struggle to stay afloat, and mergers are becoming the only viable option for many,” says Richard Tang of Zen Internet.

This is a result of the need for scale and the rising cost of network expansion. High interest rates and limited access to funding are also pushing smaller Altnets to merge or sell.

Q. Who are likely to merge next?

For Altnets that haven’t yet achieved scale, investors such as Equitix, DigitalBridge, will likely push for these consolidations to protect their investments.

• CityFibre and Hyperoptic could be key buyers.
• Regional Altnets with limited coverage will likely be acquisition targets.

Rumours suggest that AllPoints Fibre could be a potential target for CityFibre who continue to lead consolidation efforts. It recently acquired Lit Fibre and has expressed plans to acquire more Altnets over the next two years.

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Q. What is the end game for Altnets?

Become a dominant player or sell at a high valuation. Experts suggest, only those who achieve scale and profitability quickly will survive. The others will cease to operate... Connections are vital, for survival.

Q. What would Ofcom like to happen?

The regulator would like to see a mix of strong Altnets and Openreach competing across the UK to drive innovation, keep prices low, and provide broader network coverage. Ofcom is likely to support consolidation efforts if they lead to faster full-fibre deployment, but the challenge remains ensuring that no monopoly takes over.

Q. What is the best outcome for an investment company?

Maximizing return on their investments can be achieved either through increasing Altnet customer connections (thus increasing network value) or through mergers and acquisitions. Scale equals profitability in this market, and investors will likely favour consolidation to improve margins and ensure long-term value.

Q. Why do Altnets want to serve business circuits?

Business circuits offer much higher profitability compared to residential customers. Business customers typically sign longer contracts and are less price-sensitive, making them ideal for Altnets looking to improve margins. Additionally, these circuits often have higher upfront installation costs but provide much higher returns over time.

• More profitable contracts
• Longer customer retention

“Business customers stick around longer, and that’s gold for an Altnet trying to scale,” says an investor.

Q. Why is it better for the business customer?

Business customers benefit from Altnets by receiving more tailored services, faster response times, and lower prices compared to large incumbents like Openreach. Additionally, many Altnets are more flexible in their service offerings, allowing for customization and bespoke solutions that larger providers may not offer. This can be particularly valuable for small and medium-sized enterprises (SMEs) looking for cost-effective yet reliable internet solutions.

Q. What are the risks for a business choosing an Altnet instead of an Openreach connection?

While Altnets often provide better prices and customer service, there are risks to consider. Some Altnets may have limited geographical coverage, meaning businesses could face challenges if they expand into areas where the Altnet doesn’t operate. Additionally, smaller Altnets might struggle with network reliability or risk being acquired, which could disrupt service continuity.

• Limited coverage
• Potential acquisition or network instability

Tip: Businesses can use the Address Checker to see which network is available.

Q. Why can't Altnets deliver circuits to every premise in an area?

Altnets face cost barriers when rolling out infrastructure. In many cases, delivering fibre to every premise is not financially viable due to blocked ducts, wayleave issues, or hard-to-reach areas. This results in a “Swiss cheese” effect, where some areas are fully connected while others are left out. The original objective for many Altnets was to build as fast and as far as possible, leaving hard-to-reach areas unconnected.

Q. How could the Swiss-Cheese effect be remedied?

To remedy this, the UK government could expand initiatives like the Gigabit Voucher Scheme, allowing businesses and residents to request full-fibre access in underserved areas. Altnets could also consider using 5G or other wireless technologies to fill gaps in their networks, providing high-speed connectivity to harder-to-reach locations without laying additional fibre.

What’s next?

The future for Altnets is one of consolidation, innovation, and competition. As market forces push smaller players toward mergers, only the strongest will survive. For businesses and investors, understanding this dynamic and positioning themselves with the right Altnet could make all the difference.

Join the conversation: What do you think the future holds for Altnets? Will they thrive, consolidate, or face even tougher challenges? Share your thoughts in the comments below!

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