Broadband fibre companies possible collapses

There is an article in today's Sunday Times "Taxpayers face bills for broadband collapses" in which BT Chief executive Philip Jansen is quoted as saying "We've ended up with hundreds of fibre companies all building in the same places - that's madness. The market can't support that scale of expansion and, given the funding models and macroeconomic environment, there are going to be loads of casualties."

The article goes on to say "There are fears of a repeat of the fiasco around Bulb, the failed energy supplier with 1.6 million customers that had to be bailed out by the taxpayer - the cost of which is expected to total £4 billion.

Is this a sensible prediction and comparison? Fibre networks are expensive to install but have low running costs the opposite of energy companies.

Unlike the Energy companies that went bust, which were retail only, there is a network in the ground as an asset, even if the fibre company goes tits up the network will be sellable even at a loss to original installation costs. Largest player complaining about competition is not new, its part of training courses for business leaders to try to gain monopolies.

Edited by kommando (Sun 23-Oct-22 15:04:36)

The article is here:

https://archive.ph/uIhK9

What doesn't add up is the G.Network subscriber numbers, listed as 8664 but reported in the FT ( https://archive.ph/59bT5 ) in June as being 55,000.

I also don't agree with making BT the operator of last resort - why should they be responsible for maintaining low quality networks where the previous operator collapses?

Edited by jpm (Sun 23-Oct-22 15:45:10)

In reply to a post by kommando:

Unlike the Energy companies that went bust, which were retail only, there is a network in the ground as an asset, even if the fibre company goes tits up the network will be sellable even at a loss to original installation costs. Largest player complaining about competition is not new, its part of training courses for business leaders to try to gain monopolies.

No good having fibre in the ground if no one wants to buy the infrastructure, if one provider don't make it pay then what makes you think someone else will?

I must admit, the thought of the company going belly up is one of the reasons I am considering staying on FTTC. I have already been on a network that closed, ok it was a wireless network, but still a network and i just about got off it before it went belly up.


i am sure Openreach is just putting this out to try to scare people into going on to a provider using their network, but they are not wrong.

No good having fibre in the ground if no one wants to buy the infrastructure, if one provider don't make it pay then what makes you think someone else will?

If it cost £100K to build but say gets sold as a distressed asset at £10K then the costs have dropped. Shareholders of the old company lose £90K and have no say in the new company, the new company can drop prices as they bought the network on the cheap. That is the way the market works, the more overbuild the less anyone will pay for a network regardless of the original costs.

kommando

He appeared to be talking about areas where there are more than 2 Fibre networks. The one that goes bust may be worth nothing as integration costs would outweigh asset value.

Go back and think of Ionica etc that were valueless

In areas where they are monopoly suppliers the assets would have much more value and are unlikely to drag an operator down, servicing debts are what would break them and the lender would end up taking the hit.

Those bankrolled by private equity may be sold on if the possible returns drop just like CATV franchises were.

The warning is that some of the multitude will go to the wall leaving their customers with a break in service. Competition is good BUT there are costs to the losers and he is asking why should BT pick up the pieces for free.

When Ionica went bust it was a different time and the phone was much more important as people didn't have mobiles.

If you are the third altnet in town and you go bust I am not sure if there is any value in the assets. Especially if the kit owes rent on BT ductspace.

In reply to a post by jpm:

The article is here:

https://archive.ph/uIhK9

What doesn't add up is the G.Network subscriber numbers, listed as 8664 but reported in the FT ( https://archive.ph/59bT5 ) in June as being 55,000.

I also don't agree with making BT the operator of last resort - why should they be responsible for maintaining low quality networks where the previous operator collapses?

Companies House filed accounts on page 6 here state 8,664 total connected customers at year end 31 March 2022. Given it was 3,477 connected customers a year prior - its hard to conceive that they actually connected 6 times more customers in the following 3 months...either the FT got their numbers very wrong back in June or someone wasn't being truthful.

Either way those actual customers numbers are utterly pitiful as against their £25M annual wage bill and £78M of cumulative losses.

In other words a cumulative loss of £9,000 per customers!! Ouch.

It wouldn't surprise me. G.Network closed the street and laid duct out where my sister is back in July. Their website still says the service is not available, any email enquiry you make to them goes unanswered, and from experience with a client I do consultancy for, if there's a fibre issue it's taking them 3-4 days to get out, and this is a business customer in central London.

It seems like they've tried to turn all the investment money into civils works as quickly as possible and completely lost focus.

If they'd had the service ready to turn on in September then they'd have gained a customer. As it is, Hyperoptic are overbuilding them and due to complete in the next couple of months, and they don't suffer from people having the same doubts over customer service as G.Network.

Edited by jpm (Sun 23-Oct-22 22:30:23)

Another altnet that's spent £100 million passing 50-60,000 premises is a good candidate for the list. Now on 100,000 premises with a 10% uptake. No idea how much the last 40-50k premises passed cost.