CityFibre in distress?

https://www.ispreview.co.uk/index.php/2023/09/cityfi...

This is a very odd story imo - a load of builds being paused mid construction. This isn't really what you do u nless things are going quite badly wrong (compared to say slowing down starting new sites). Even ORs strategy has to finish off places they've started before starting new builds more in their recent change of tack to reduce costs.

Stopping builds half way and kicking off the contractor will always result in vastly higher costs to finish the work off, as things will have been left in a bit of a mess and the status of all the work likely not perfectly documented, which will end up in resurveying costs.

Really looking at it the output from CF has been pretty poor. £6bnish spent on currently 3m homes and seemingly a very sketchy build program going forward. It looks as of the last accounts at least £3.5bn has been drawn down, so in the region of £1000/home connected. I can't see how they can get to 8m in the current funding envelope. Keep in mind the leaked video from VM said VM was aiming for £100/home to upgrade from docsis to xsgpon, and CF and VM have extreme overbuild.

Last accounts also show very poor takeup (this was from Dec 22) - only 174k homes connected out of 2.2m (at that point in time), so sub 10%. Growth wasnt particularly good from the year before, so even if it doubled to 400k say this year you'd be still looking around 10%, which has to be way behind target and there is no way they will cover finance interest on those numbers is my guess.

Numbers don't add up to me and this pause with kier and other builders make me think things are going pretty wrong.

It’s still relatively early days and difficult to know what’s what and draw firm conclusions, but it’s becoming clearer who some of the winners and losers are in the great FTTP “gold rush” of the late twenty teens and early twenty twenties are.

What’s slowly killing all these companies is the monumental cost (difficulty and delays) in building your own duct network (or placing your own poles) - coupled of course now with the ever increasing cost of finance. Unbelievably low interest rate and cheap money were only ever a passing phase. Getting customers to sign up to your new network isn’t easy either - which is why so few AltNets let on what their connected customer numbers really are - they are often downright embarrassingly tiny.

CityFibre are digging their own trenches (well their cadre of subcontractors are) they also have to plan, build and run their own Fibre Exchanges (FeX) which won’t be cheap to either build or run.

Other AltNet operators that are taking the PIA approach (very few or no trenches to dig) and siting their headend gear in existing BT exchanges have none of those costs and concerns - they operate a very lean capital intensive operation. I dare say they will be the winner and the losers will have thousand of miles of ducts and microduct but an otherwise decrepit balance sheet.

Interesting times to come.

I am going little bit of subject here.

There lot diffrance between Virgin Media previous business and how thing being done today with Altnets like Cityfibre.

Cable only had 1 ture rival business and that was BT. There was none of this (Openreach Wholesale) Talk Talk, Zen, Sky, etc. It was BT or nothing for landline. And for TV it was free terrestrial tv, Sky (for short while BSB). BT was was not allow to do TV for long time something which was decision of the Prime Minister at time, Margaret Thatcher. (Yes if wasn't for MT we would of had fibre many years ago).

Also Cable franchise was awarded under licence (Cable and Broadcasting Act 1984) they where given defined geo bounders of where they could build there network. Cable licencee was only allowed by law to build in there licenced area. So over build was not promited.

So anyone use past as an guide to what going to happen with Altnets is most likely going to be wrong. As this didn't happen with Cable.

PS A few cable franchise winers did nothing they ended up selling there franchise to others before even building started or just never got funding to build for one reasion or another.

Cityfibre do *seem* to have fallings out with their contractors quite a lot - whether this is just because it's reported more is unknown. The reasons for falling out with their contractors is also unknown - maybe it's a cynical negotiating tactic because they want to pay less than was originally agreed, maybe the contractor simply can't fulfil their agreed terms - nobody really knows. I'm not sure reading into it too much without these facts is going to help much.

In reply to a post by Pheasant:

CityFibre are digging their own trenches (well their cadre of subcontractors are) they also have to plan, build and run their own Fibre Exchanges (FeX) which won’t be cheap to either build or run.

At least in some areas, Cityfibre are using PIA. So I guess they have plenty of data about how the costs of self-build and PIA compare.

Same with the cost of building a FeX versus renting space in an OR exchange.

It's a bit more than a falling out cancelling 4 city builds mid build with a large contractor like Kier.

In reply to a post by candlerb:

Same with the cost of building a FeX versus renting space in an OR exchange.

The issue OpenReach are planing close most of there exchanges.Staring with 5 up to 100 by 2030. After 2030 then expect them to start closing them at an accelerate pace.

https://www.ispreview.co.uk/index.php/2022/03/altnet...

Its been proven that even large contractors aren't immune from going bust, or trying tactics to reduce costs (sometimes at the cost of the cortracts).

Here, CityFibre used a combo of PIA, and own trenching to build their network, so I'm sure they're putting cost benefit analysis into practice

It's been widley known which exchanges they will keep long term for at least 10 years.

In reply to a post by candlerb:

At least in some areas, Cityfibre are using PIA. So I guess they have plenty of data about how the costs of self-build and PIA compare.

I think they use PIA to get to homes where cost effective and use their own trenches down the road. They are certainly 'hybrid'.

Same with the cost of building a FeX versus renting space in an OR exchange.

Some Alt Nets just use a big shipping container in a central town location. Not renting in OR exchanges is likely cheaper if OR plan to decommission that location.