Who will survive in the crowded UK fibre market?

5th May 2023
Harry Fowle

The themes of consolidation in the UK fibre market and concerns over overbuilding have dominated the headlines.

With over 100 alternative network operators (altnets) actively building fibre networks in the UK, the question on everyone's mind is, who will survive and thrive? Which altnets will be at risk and what does this mean for altnet market growth strategies? What is the future of regulation and market structure?

Intelligens Consulting explores the possible scenarios and predicts the outcomes for the UK fibre market.

According to the thought leadership piece written by Intelligens Consulting, consolidation is a common trend in industries that experience rapid growth and fragmentation, and the UK fibre market is no exception. As more and more fibre operators enter the market, competition intensifies, and the cost of acquiring and retaining customers increases.

The analysis suggests that larger altnets with ‘deeper pockets’ could dominate and potentially acquire smaller alternative network providers to expand their reach and market share in unserved areas. 

However, Iqbal Singh Bedi, CEO and Consulting Director at Intelligens Consulting, “not all altnets will be acquired”. 

This is because the larger operators may not need to acquire smaller altnets given their capacity to build faster than the time and cost it takes to close an acquisition deal.

Expert Bedi goes on to say that to ensure their survival, altnets can adopt one of two strategies. According to Bedi, “They can merge with each other or at investor level to create larger, more powerful entities with greater bargaining power and a reduced cost base, or they can develop a niche proposition and differentiate themselves from their competitors”. 

Purpose-driven propositions such as providing fibre to social housing and focusing on unserved rural geographies are examples of niche strategies. Either niche approach has the potential to create a strong market position by attracting a loyal customer base and investors who are interested in supporting purpose-driven companies that make a positive impact on society.

A note of caution is added, as consolidation could lead to reduced competition and potentially higher prices for consumers if the market becomes too concentrated. It 

Bedi says that “It is important for Ofcom to monitor market developments closely to ensure that competition remains healthy, and consumers are not disadvantaged”.

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