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Casualty of Competition as People’s Fibre Enters Administration

Monday, November 22nd, 2021 (8:27 am) - Score 4,224
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Alternative UK network ISP People’s Fibre, which started building a new 1Gbps Fibre-to-the-Premises (FTTP) broadband network in 2020 and soon ran into some challenges with competition from rivals, has fallen into administration due to a “breakdown in the relationship” between the company’s director and investors.

The network builder, which previously claimed to have “been deploying full fibre in Sweden for the last 10 years,” was first spotted in late January 2020 (here) and seemed intent upon serving “homes and small businesses in areas where FTTP is non-existent or poor.” Not long after that, we discovered that their first deployment was occurring in Deeside, on the North Wales border with England.

At the time we noted that most of the broadband in Deeside had come from Openreach’s (BT) hybrid fibre FTTC and G.fast networks, but they also had a few small patches of FTTP. The location itself reflected a predominantly industrial conurbation of towns and villages near south Chester, which is where Openreach have been building a fair bit of FTTP (they announced a plan for Flintshire towns and villages in late January 2020 and today cover most of the residential area of Deeside).

The area might have been able to support commercial competition between a couple of full fibre rivals, although it did still seem like a potentially risky pick for a new altnet. Nevertheless, it still came as a surprise when, in June 2020, People’s Fibre suddenly announced they were stopping their build in Deeside because of Openreach’s rival build, which they warned was “directly blocking both our progress and investment” (here).

Not long after that the provider revealed, in October 2020, that their engineers were now working in the Essex town of Braintree (here). Once again, we noted a problem. Firstly, Gigaclear were already deploying their own FTTP across the District of Braintree in Essex and, on 30th September, the day before People’s Fibre revealed their rollout, the ISP announced that they would extend this to cover the town itself (here).

In addition, County Broadband had in 2019 also named Braintree for their own rollout plan (here), albeit focused more on poorly served rural villages than the town itself. Suffice to say that People’s Fibre had retreated from competition in one area, only to find themselves in an awkwardly similar position with the second location they targetted.

Calling in the Administrators

The risk of overbuild is a fact of life in any aggressively competitive commercial market, particularly in more urban areas, although smaller altnets usually try to get a first mover advantage by building out their infrastructure before a rival enters the same space. The competitive reality is that if you target a town, where more people tend to live (attractive for investment), then you can’t necessarily expect to have that area all to yourself forever.

Some altnets recognise this risk (e.g. CityFibre) and position their service to undercut established players, while others often have to cross their fingers and hope that they can get the local build done before a rival enters the same space. In this case, it appears as if People’s Fibre, which lest we forget had been targetting “areas where FTTP is non-existent or poor“, may have bitten off more than they could chew.

NOTE: Ofcom has a “supplier of last resort” process for tackling situations where an ISP collapses, if they can’t be rescued.

Last week we spotted (credit to Eccles) that the provider had appointed an Administrator on 26th August 2021 (Robert Horton of R2 Advisory Limited). Administration frequently occurs when a company, such as one that is in financial difficulty, is put into the hands of an administrator, which then decides whether they can help the company to continue running or sell it off for a good price.

During administration the company is protected from legal action by people or organisations who are owed money (creditors) and nobody can apply to wind up the company. Administration can also mean that the company doesn’t have to pay all its debts in full, but if deemed necessary, they can still be wound up.

According to the administrator’s report, which was published on 11th November 2021, People’s Fibre was principally funded by investor loans (total of £1,784,212) via five Swedish based investors. But a “breakdown in the relationship between the director of the Company and Investors” (the director / CEO is Mr Leo Chong) resulted in those investors seeking an Administration Order on 23rd July 2021.

Statement from the Report

“Whilst the Company was expected to be loss-making in year one, revenue of approximately £580,000 was anticipated. However, revenue of only £13,000 was generated in the three months preceding the Administration. The Company’s financial records indicate that losses of £150,000 were being incurred per quarter.”

Given the level of investment and slow pace of organic take-up, expecting revenues of £580k to materialise in year one sounds incredibly optimistic for such a small early build. We note that Metis Partners Ltd has since been called in to help “assist with the marketing and sale of the Company’s business and assets“. Apparently, there are 11 interested parties and other formal declarations of interest have been received. The administrator has opted to keep the ISP running for 12-weeks while this process is conducted (at an agreed cost of another c.£161,000).

People’s Fibre is stated to have so far only connected 150 customers to their network, which has covered 5,293 premises. But as we always say, during the ramping-up phase of a new network build, you can’t judge take-up properly unless you look at each area c.2 years after deployment has finished (i.e. a rapid build will always suppress the take-up figure). Network coverage is also expected to grow another 1,500 premises during the 12-week period.

We should point out that the administration process became more complicated after the director, Leo Chong, notified that certain parts of the new fibre network were likely to be owned by a sister company – PF Works Ltd (PFW), upon which Chong is also a director. “This caused significant and immediate difficulty, both in terms of offering the business and assets for sale, and in terms of dealing with trade suppliers, some of whom had contracted directly with PFW,” said the administrator.

After “protracted” discussions, PFW was placed into Administration on 1st October 2021 and became part of the same – now joint – process as People’s Fibre. The administrator’s process continues to run, and we can only hope for a positive outcome.

As we’ve long said, you can’t have a market that is chocked full of c.100 different alternative networks, all building FTTP, and not experience both some casualties and consolidation further down the road. In this case, we think consolidation – based upon the asset value of what has already been built – seems likely to be the outcome via a network buyer (probably a rival altnet).

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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.
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18 Responses
  1. occasionally factual says:

    It is like no one remembers the cable TV bubble or the internet bubble or the 100’s of other investment bubbles over the centuries.
    Just one of the many to bite the dust in the next few years.

    1. Scott says:

      100% – this will be the first of many. Some will merge over time do delay the inevitable but to me it looks to me like Hyperoptic and Cityfibre will outlast (and be the main competition to Openreach and VMo2).

    2. Mark Jackson says:

      I can think of around 10-20 altnets that stand a reasonable chance of surviving the consolidation crunch, but others are much more borderline. I can see quite a few that have overpromised and under-delivered already, but there are others that haven’t overpromised and are actually over-delivering on build.

    3. Ex Telecom Engineer says:

      “I can see quite a few that have overpromised and under-delivered already, but there are others that haven’t overpromised and are actually over-delivering on build.”

      Mark, I can see that CityFibre have been building lots of infrastructure, since they’re backed by investors with deep pockets.
      I would think the success, or failure, of the Altnets will depend on reaching a profitable critical mass. From recent articles, I also notice CityFibre are investing £65 Million in backbone network, this would be a necessity rather than an add on imo. All this access/backbone new build will require maintenance and incur recurring operational costs, so I would think CityFibre are in a sprint to attract wholesale business.
      Reading between the lines, Goldman Sachs have shied away from channeling more money into CityFibre, highlighted by the most recent capital infusion from Mubadala Investment Co and Interogo Holding.
      Do we know how the Altnets, especially CityFibre, are doing in connecting customers to their new networks?

    4. Roger_Gooner says:

      This is nothing like cable TV which had many operators who implemented several hundred rollouts but did not overbuild in other cable areas as everyone had their own franchise areas. Many were not well funded and eventually all were bought up by either NTL or Telewest and eventually Telewest was bought by NTL.

    5. MilesT says:

      More like the railway mainia of just under 200 years ago, which is very well documented.

      Alike in social step change, economic investment, and light regulation in offering to build, although the presence of some big providers of well rolled out adjacent technologies is different.

      Initial consolidation likely to follow a similar pattern of railway consolidation/sharing for reward.

      I wonder if you could modify the rules of the board game “Railway Rivals” to model alt-nets as a game?

  2. Regorimabitbackward says:

    I hope your right about altnet buy out if only for the employees.I see this as part of the problem for example let’s say you get your network built, and you get a good customer take up, a while later an altnet comes along ,and now you’ve got competition surely this has to be about a price war and what price you retail your service at.If the altnet is bigger than you good luck. Here is an idea, if your the altnet. why not just sit back let the competition do their builds wait for the administrators to step in and buy the company, so I think there’s going to be more of these type of storyline yet to come. I just wonder what is in it for all the investors of all these startups and altnets are they here to provide a service or something else?

    1. DaveIsRight says:

      They are here to make money. That don’t care in the slightest about a service. They are all investing with the hope of being able to sell the company to one of the big fish for a nice lump of cash. There are certainly a small number of companies who actually DO care and are focussed on setting up a good service in their area, but I’d suggest most are in it for the quick buck.

  3. FibreBubble says:

    Very poor take up strikes again. Many of these altnets are just burning other people’s money with fantasy business plans.

    1. Burble says:

      Our pole serves 6 properties who get 7Mb on a good day from FTTC, only three of us have taken up FTTP. OK the others are rented properties, but they are all long term tenants and the landlord has no objections. If this is anything like typical then those in higher FTTC areas might be even less likely to swap.

  4. Anthony Goodman says:

    I remember the story here a few weeks back saying CityFibre will be buying up some Altnets to expand their coverage. I think this is clearly going to be one. So not exactly the end of the world.

    1. Mark Jackson says:

      Possibly they’ll have a sniff, but toob is their first focus right now.

  5. MrDeo says:

    Me and some pals looked at setting up WISP in 2000/2001. To get backhaul and peering we were required to pass coverage maps to BT. We decided not to go forward with it due to cost. I know some who did, and odd enough just around the time that they would get all of the permissions to deploy everything, BT would start upgrading the area.

    Seen this happening now for 20 years, BT says they don’t do it, that they just happen to upgrade areas where competition is looking to launch.

    1. Nick says:

      Thats business in the telecoms industry although I’m sure that requirement to show BT or should I say Openreach has been extended to all companies. Isn’t this so that you don’t tread on other people’s toes? So you can plan a network without damaging someone else’s?

      But it makes perfect business sense for BT to stamp out competition, I’m sorry it ruined things for you but that’s what happens when the competition see that there is demand and room for another player.

      BT did the same thing when Mercury installed its payphones, in the 80s, the BT estate went from 22,000 to over 70,000 by 1995 even though half of them were creating a loss.

      I also noticed that when Telewest was rolling out broadband in certain parts of London, BT suddenly was able to offer Broadband to everyone in those specific areas of the Telewest franchises towards the end of 2001/2002 whilst Westminster and Milton Keynes which were BT Cable franchises leased to NTL from end of 1999 had a very slow rollout of ADSL.

      The BT Cable franchises leased by NTL, BT made sure these two franchises would never get Digital Cable TV and only a small part of the Westminster franchise got Cable Broadband. I’m sure they were delighted when Virgin Media announced that they were pulling out completely in 2012.

  6. Just a thought says:

    If there is no sale, what happens to the assets? Looks like they have attached connectorised blocks to the BT poles so guess they had a PIA. But if no one buys them out who’s responsibility is it to clear the ducts and poles, or do BT just get it by default as it is inside their infrastructure?

    1. Zed says:

      All telcos need to lodge a bond with Ofcom when registering for code powers. This can then be used to clear out any networks if the company goes bust. https://www.ofcom.org.uk/phones-telecoms-and-internet/information-for-industry/policy/electronic-comm-code/funds-for-liabilities

    2. Just a thought says:

      @zed
      Interesting. TY.

  7. Nick says:

    @Zed Funds for liabilities are funds for removing Electronic apparatus when a company goes under. Infolines Public Networks which owned Interphone telephone boxes around the country placed Interphone public Networks into liquidation whilst evading funds for liabilities, the ex-Mercury phone boxes were left dotted around the country some still in situ. New World Payphones and infocus public networks picked up most of these although there is handful left to decay.

    Infolines evaded the funds for liabilities requirement for 6 years before Ofcom fined them £10,000.

    My point is, this requirement does not help consumers, only local authorities on removing electronic apparatus and street furniture.

    Someone will buy the assets of Peoples fibre from the administrators as its something that can be saved with the right amount of investment.

    If a network of phone boxes can be saved I’m sure a fibre network can.

    I’m sure Vodafone will be watching this, I’m quite certain companies like Vodafone will buy up all these altnets just like all the Cable companies were gobbled up by NTL and Telewest now Virgin Media.

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