CityFibre Restructures to Keep UK FTTP Plan on Track – Cuts 400 Jobs UPDATE

CityFibre has reportedly begun a new restructuring process that could result in the loss of up to 400 jobs out of their 2,000 strong workforce. The operator has blamed this on the UK’s “struggling” economy (i.e. causing rising costs for their business) and the desire to keep their rollout of full fibre gigabit broadband on track.

At present CityFibre’s FTTP network, which is being sold via 36 different UK ISPs (TalkTalk, Vodafone, Giganet, Zen Internet etc.), aims to cover up to 8 million premises (funded by c.£2.4bn in equity and c.£4.9bn debt) – across over 285 cities, towns and villages (c.30% of the UK) – by the end of 2025 (here). So far they’ve already completed 2.5 million premises and are passing 22,000 premises per week.

However, no operator is immune to the current challenges (e.g. surging inflation, higher import costs etc.), which has triggered rising costs both in the supplier chain and internally (e.g. electricity, leases and so forth). Even major players like BT have had to cut jobs, while Openreach have updated their approach to build (here).

We first began to hear about this yesterday afternoon after a number of CityFibre’s staff informed us that they’d been notified about the new restructuring, which saw the operator begin a 6-month consultation period ahead of the expected redundancies. The situation has now been confirmed via the Telegraph (paywall).

Greg Mesch, CityFibre’s CEO, told staff:

“The UK’s economy is struggling, and this is affecting both the market and our customers. While our rollout is fully financed, these pressures only increase the importance of taking responsible financial and operational decisions. Realising a more efficient operating model requires us to act and structure ourselves differently. Sadly, this is likely to result in a reduction to our workforce.”

At the time of writing, we are still awaiting an official comment from the operator, not least with respect to whether any of this will have an impact upon their current FTTP rollout and targets. After all, an operator that plans to reach 8 million premises may ultimately need more staff, not less.

But we suspect that the biggest unknown may be in how the rising costs are impacting their civil engineering contractors, some of which are believed to be under a fair bit of strain. Not to mention that the UK’s market for full fibre has become aggressively competitive, with a wave of consolidation widely expected for the near future.

UPDATE 11:21am

We’ve had an official response from CityFibre, which you can see below. The operator also informed us that they currently have 2,300 staff and do indeed expect redundancies of around the 400 mark, but they also expect to create around 200 new roles and that in-turn suggests a net outcome of 200 job losses.

However, most importantly of all, they expect to see no impact on their rollout and the 8 million target. The operator is currently planning to build at least as much network this year as last, but to reach 8 million by the end of 2025 will require them to continue ramping up.

A CityFibre Spokesperson said:

“CityFibre’s rollout has now passed more than 2.5m homes and we’ve reached a build rate of over 1m homes a year. It’s now time for us to begin our transformation from a scale-up into a world-class network service provider, focused on maintaining steady network expansion and a consistent, high-quality service. This requires us to change the shape of our organisation as we move to a more efficient operating model for the long term.”