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Fibre Engineering Firm Lite Access Updates on its Cityfibre Dispute UPDATE

Wednesday, March 3rd, 2021 (9:05 am) - Score 2,472
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Lite Access, which specialises in deploying UK fibre optic (e.g. FTTP) broadband infrastructure, has officially appointed FRP Advisory Trading Limited as administrators and confirmed that they intend to “vigorously defend” themselves against Cityfibre’s position that they were in repudiatory breach of contract(s).

Just to recap. Last year saw Lite Access scoop a string of recent contract wins, which for example saw them hoover up fibre optic rollout contracts for Cityfibre in Cambridge, Lowestoft and Bury St Edmunds. The company has also worked with various other broadband and telecoms firms, such as Gigaclear and Openreach.

However, toward the end of last year the civil engineering firm suddenly announced that they had “temporarily suspended UK operations” due to the “ongoing COVID-19 pandemic, which continues to become worse, along with challenges related to its ongoing builds.” The company later added that they had opted for a suspension in order to give time for a consultation with stakeholders to help “optimize both its current operations and existing contracts in a COVID-19 environment.

The situation then appeared to be improving when, on 1st December 2020, the company announced the “partial” resumption of UK operations, but it wasn’t to last. By mid-December Lite Access had issued another statement, which confirmed that they had “elected to file a notice of intent to appoint an administrator[in order to] create a moratorium over the Company for a period of 10 days to protect the assets of Lite Access UK” (here).

At around the same time as this ISPreview.co.uk began hearing from various companies in Lowestoft, which contacted us to complain that Lite Access had suddenly exited the area and left them with unpaid bills worth many thousands of pounds. Cityfibre followed this by confirming that they were no longer working with Lite Access in the three locations.

A Cityfibre spokesperson said (Dec 2020):

“We can confirm that we are no longer working with Lite Access Technologies and construction has been paused as we plan for next year with the intention of appointing a new build partner.

We expect to recommence construction as soon as practicable and continue to bring gigabit speed broadband to thousands more homes and businesses.”

Unfortunately, the trail then went silent until the most recent trading update in 2021, which has revealed that Lite Access have finally appointed FRP Advisory Trading Limited as administrators in order to protect their UK assets. At the same time the company’s President and CEO appears to be setting the company up for a legal fight with Cityfibre.

Carlo Shimoon, President and CEO of Lite Access, said:

“In December 2020, the Company resumed partial UK operations, based on good faith discussions with its customer that certain contractual challenges would be addressed, and was working to build a pathway to increase the ramp-up of operations and was working with stakeholders to create a sustainable path forward incorporating planning and operational efficiencies and optimizing existing contracts.

However, shortly after the continued discussions, the Company received a notice from its customer that the Company had allegedly committed a repudiatory breach of its contracts for FTTP installation in Cambridge, Lowestoft and Bury St Edmunds (the “contracts”) by its suspension of works.

Based on the alleged repudiatory breaches, the customer has purported to terminate its engagement of the Company under all of the contracts. Notwithstanding the notices to terminate, the Company intends to vigorously defend its position that it was not in repudiatory breach of the contracts at the time of its receipt of the notices and is actively engaged with its UK legal counsel regarding this matter, as well as potential remedies.

Consequently, the Company took immediate steps to mitigate any unnecessary cash burn for its UK operations and elected to file a notice of intent to appoint an administrator (the “NOI”) to create a moratorium over the Company in order to protect the assets of Lite Access UK. Subsequent to the fiscal year-end, in January 2021, the UK business officially appointed FRP Advisory Trading Limited as administrators. As a result, our year-end results were negatively impacted by a number of factors, including non-cash impairment charges of $4,736,127 and an accrual of $3,315,147 related to an onerous contract provision.”

As it stands Cityfibre are still in the process of trying to find a new contractor to replace Lite Access in Cambridge, Lowestoft and Bury St Edmunds, which could be made more tedious by the threat of a legal challenge against their prior decision to terminate the associated contracts.

Meanwhile, Lite Access has seen a gradual improvement in its share price from the December low (see below), although this partly reflects recent financing efforts, acquisitions, results and some contract wins in other markets.

 

UPDATE 5th March 2021

Cityfibre confirms that they’ve appointed a new contractor for their £14m Lowestoft build (Pod-Trak Limited), and we’ve noted that some work has already restarted. The town-wide rollout is due to reach substantial completion in 2022.

Charles Kitchin, City Manager for Lowestoft, said:

“We had a number of issues with the previous contractors amid concerns about the standard of their work and also the quality of the work. We have very high standards, and these standards were not met as things did not go the way we wanted with the previous contract.

That contract has now ended and I am pleased we have a new contractor in place – Pod-Trak Ltd – a good company, who will be finishing the Lowestoft build. I want to reassure people in Lowestoft that we are going to be re-starting soon.”

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
Leave a Comment
8 Responses
  1. A_Builder says:

    Very odd.

    Under the Construction Grants and Regeneration Act they could have appointed an Adjudicator to determine the matter pretty quickly and more cheaply than litigation.

    The company being insolvent, as evidenced by the appointment of an Administrator, complicated matters as most standard construction contracts self destruct at that point.

    If there was a suspension provision. Which there is in most standard contracts then the argument must be that either the proper notice was not served or in the alternative that an effective notice was not served. To the unwary a notice can be deemed ineffective simply because it is delivered late / to the wrong address/ or does not contain a critical bit of info. It is messed up surprisingly often.

    Looking at the wording I know which lawyers they are using!

  2. JustMe says:

    They were previously booted out of another fibre provider’s build as they were so bad at what they did. I read with interest when they won these contracts (a bit surprised) but not surprised at the outcome.

  3. TheManStan says:

    The 2 companies 2019 accounts read very differently…

    Lite Access had creditors owed £9.7M falling due within one year, with debtors owing them ~£1M, so excluding assets, they owe net £8.7M (loss), net position of -£6.2M, with £402K in the bank

    Pod Trak had creditors owed £5.4M falling due within one year, with debtors owing them £8.2M, so excluding assets, they are owed net £2.8M (profit), operating profit stated as £2.56M, with £3.8M in the bank

  4. Stoo says:

    There are certainly signs of activity in Lowestoft, plenty of orange marks on the pavements indicating where rework is required (and there are a *lot* of orange markings), one.network is indicating that works have restarted in the last couple of days, although I haven’t seen anything in person yet.

  5. Tommy says:

    I’ve had cables laid by the previous contractors since summer 2020, according the the news article all the works will be completed by end of June 2022, does this mean I’m gonna have to wait 2 years before I can order services or are they gonna allow switch on area by area, if I’ve gotta wait until completed that seems a ridiculous wait time?.

    1. Mark Jackson says:

      It’s usually area by area, rather than build everything and then switch-on.

  6. Tommy says:

    I sure hope that’s the case Mark but I do wonder if that is the case why I still can’t order services considering cables were laid around summer 2020 for me.

  7. Roman Mervart says:

    I am considering getting Vodafone FFP in Cambridge and I am not sure what it means to me in terms of actually being able to get this service now. There is CityFibre cabling in my street (CB4 2GY) and Vodafone Gigafast is being offered on the Vodafone website but is it real? Who’s engineers are actually making the final connection to the house?

    Thanks

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