Full Fibre Broadband ISP Hyperoptic Sees Losses Climb, But Positives Remain UPDATE

City-focused UK broadband ISP Hyperoptic, which has deployed a full fibre (FTTP/B) network to reach “more than” 1.73 million homes in parts of 64 towns and cities, have recently published their annual accounts and revealed a surge in losses to £142m on the back of high interest rates. But revenues, coverage and their customer base also saw growth.

The operator, which is now home to a customer base of 340,000 and is targeting 500,000 for the future, was previously known to be aiming to cover 2 million premises with their gigabit broadband network by the end of 2024. But Hyperoptic’s latest results reflect the period to the end of 2023, which means that its figures are a bit behind some of those more recent ones mentioned above.

Overall, it’s been a bit of a mixed year for Hyperoptic, which like many established networks is seeing the impact from high interest rates helping to fuel a total loss for the year of £142m (e.g. the interest due on their loans reached £66.85m, up from £27.66m in 2022). The operator has also continued to expand their network, which is very capital intensive.

On the other hand, revenues grew by 19%, their customer base jumped 17%, while network coverage jumped from 1.08m to 1.51m total homes passed and their total employee count increased from 1,865 to 1,943. But we have seen a few smaller redundancies during 2024 (mostly ‘business as usual’ style movements, with hires in other areas), so this may not change much in 2024.

As Hyperoptic gets closer to hitting their 2 million premises target then, without a big surge of new investment, we’d expect their focus to increasingly switch away from build and more toward growing their customer base.

Summary of Key Hyperoptic Figures for 2023

Revenues grew 19% to £93.4m (2022: 21% growth to £78.7m)

Gross profit grew to £73m (2022: £62.3m), but their profit margin shrank a bit to 78.1% (2022: 79.2%) due to a rise in network operating costs (EAD rentals, PIA etc.)

Capital investment reached £209.5m (2022: £186m), due mainly to network expansion

Subscribers grew by 17% to total 311,999 (2022: 266,856)

Average revenue per user (ARPU) increased to £26.9 (2022: £26.7)

Total homes passed (network coverage) grew to 1,514,162 (2022: 1,085,763) – including 200,000 from new build homes

Administration costs increased to £128.4m (2022: £105.1m), mainly due to a rise in depreciation related to increased fibre network investment.

Operating loss increased by £14m to total £63.1m (2022: £49.1m), but total loss for the year hit £142m (2022: £76m) – due largely to high interest rates increasing borrowing costs.

Interest due on loans reached £66.85m (2022: £27.66m)

Borrowing grew sharply to total £916.2m (2022: £624m). The provider had total loan and debt facilities of £996.5m at the end of 2023, which has since grown and is now around £1.3bn (here).

Employees totalled 1,943 (2022: 1,865)

UPDATE 10:40am

We’ve had a comment back from Hyperoptic on the results.

A Hyperoptic spokesperson told ISPreview:

“The loss after tax and financial interest expenses for 2023 was in line with expectations for our long-term infrastructure business plan. We made significant capital investments in 2022 and 2023 to meet the UK’s gigabit requirements, while successfully delivering strong customer and revenue growth. As with all infrastructure businesses, investment must come first, including financing costs.

Although, as everyone is aware, it has been a more challenging interest rate environment, we continue to demonstrate rapid growth and successfully access new capital to support our business plan.”