The UK consumer broadband market is highly concentrated on five big ISPs (internet service providers), four of whom buy wholesale broadband from the incumbent BT Openreach.

Altnet networks have, apart from CityFibre with TalkTalk and Vodafone, been unable to break into this significant route to market. The result of this is that fibre to the premise (FTTP) take-up of the different Altnets in the UK market is on average 16% (roughly half of BT Openreach) with ranges from 5 to 30% based on network maturity.

One of the issues is that the proliferation of multiple small networks makes it costly and complex for the larger ISPs to work with Altnets. The much-anticipated consolidation and the integration of networks and IT systems may provide a clearer route for larger ISPs.

The combination of significant capital expenditure to build networks, highly competitive “overbuild” in specific geographical areas and low tale-up in the UK is unsustainable and will be resolved by M&A and restructuring.

There is however a lot Altnets can do to drive take-up and in turn profitability and return on capital employed and give them more chance to be among the winners in the fibre to the home market.

This paper is part 1 of 2, focused on providing an overview of the market share and take-up rates, and the impact of consolidation in retail and wholesale markets.

In the forthcoming part 2, we provide valuable insights and actionable recommendations to support Altnets in increasing take-up.

We hope that investors and management teams find these insights valuable.

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