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CityFibre Targets UK AltNet Acquisitions Despite Big Losses

Monday, Jul 24th, 2023 (8:33 am) - Score 9,520

CityFibre, which is rolling out a 10Gbps capable full fibre (FTTP) broadband ISP network across the UK, has published their annual accounts to the end of 2022 and revealed that their losses nearly doubled. But their network coverage also doubled to 2.2 million homes (RFS) and live consumer connections surged to 174k (up from 61k).

The operator’s Fibre-to-the-Premises (FTTP) network has so far covered over 2.9 million UK homes, although they’re only “Ready for Service” (RFS) to consumers at 2.5m of those (note: the figures in their annual report are older and thus smaller). Cityfibre’s aim is to cover up to 8 million UK 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).

NOTE: Multiple retail ISPs, such as big names like Vodafone and TalkTalk, access this network via wholesale and then sell packages to consumers.

At this point, it should hopefully go without saying that alternative networks, particularly those that are deep into the rapid rollout phase of an expensive new network, will be burning a heck of a lot of money to build their networks – often based on an expectation of long-term payback (this can take 10-15 years to realise).

Nevertheless, the ability to conduct this as efficiently as possible and to then deliver good take-up is important (the latter takes a lot of time to grow). The operator’s latest annual accounts reveal that they ended 2022 in somewhat of a mixed position, with good network growth (2.2m RFS homes in 2022 vs 1.2m in 2021) and sharply rising take-up (174.4k consumer connections vs 60.9k).

On the flip side, CityFibre also saw operating losses more than double to £114.8m (2021: £42.3m) and the cost of servicing the company’s debts has also more than doubled (mainly due to them now holding a much larger debt pile after last year’s £4.9bn debt raise). You can see a summary from some of the key points below.


The figures help to explain why CityFibre – supported by investment from the West Street Infrastructure Fund (Goldman Sachs), Antin Infrastructure Fund, Interogo Holdings and Mubadala – began a new restructuring process at the start of 2023 that resulted in the loss of around 400 jobs and impacted their pace of build (here). Not long after that it was reported that VMO2 (Virgin Media and O2) had also held “initial talks” over the possibility of mounting a £3bn takeover bid for the operator (here).

CityFibre is naturally under many of the same pressures as almost everybody else in the market, such as rising build costs, competition (aggressive pricing and overbuild by rivals etc.) and need to generate a viable level of take-up in order to satisfy investors. But despite these pressures and the fact that they’re not expecting to turn a profit until 2025, the operator’s COO, Simon Holden, told the Sunday Telegraph that they’re “happy where we are and we’re confident in our plan“.

A week ago we queried whether the operator still expected to be “substantially completed” (a vague term that allows some flexibility on targets) on their 8 million premises target by 2025 and were told that remained the plan. The operator also signalled to us that, despite being a potential consolidation target themselves (VMO2 / nexfibre), they are also looking to grow their coverage through further acquisitions or partnerships (apparently, they have an interest in up to 20 potential altnets).

Naturally, if they do pursue multiple acquisitions, then it’s likely to be from operators with only minimal overlap with their own network. Possible options on the list could be Hyperoptic, Netomnia, Gigaclear, toob and others. But history does show that negotiating a viable deal for such things can be difficult, particularly if the sellers have an inflated view of their network’s true value (i.e. sometimes it’s better to wait for a business to get into trouble before stepping in with an offer).

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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 X (Twitter), Mastodon, Facebook and .
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51 Responses
  1. Avatar photo Oggy says:

    So at the end of their last financial figures their network had an under 8% take up rate of houses that could use their network?

    Have I understood that correctly?

    According to this article Openreach are at almost 30% – https://www.ispreview.co.uk/index.php/2023/03/openreach-bring-fttp-broadband-to-10-million-uk-premises.html

    1. Avatar photo Anthony says:

      Using anecdotal evidence I highly doubt that 30% for Openreach is correct. When you look at the areas on Better Internet Dashboard that it says at least one house in that postcode has it. The numbers for Openreach FTTP in Newcastle are tiny and many areas have had FTTP for well over a year. It is definitely not 30% take-up. I would say at most from this its 5% in Newcastle

    2. Avatar photo Big Dave says:

      @Anthony, 30% doesn’t sound unrealistic to me. You have to remember for large parts of the UK Openreach are still a monopoly supplier. They went live in our street 2 years ago and are now at 38% (23/61 properties) take up, so averaged out 30% doesn’t sound that unrealistic. Swish are now building out the town but how successful they will be against an operator that has a 2 year start on them remains to be seen. On the plus side they are building to parts of the town that Openreach haven’t got to so they could have some success there. As the saying goes the early bird catches the worm.

    3. Avatar photo Flame Henry says:

      Sadly too few people track the daily developments of the UK broadband market and will only consider moving when facing an unpleasant price-hike or, for the prividgled few, a house move.

    4. Avatar photo Jon says:

      Another thing to remember is that some ISPs will re-grade customers as part of renewals or upgrades, meaning getting customers to move from VDSL to FTTP both on the Openreach network is a much easier proposition than getting them to switch network and provider entirely.

      This is a major advantage that only Openreach has, which will absolutely contribute to their higher figures.

      With many contracts now being 18 or even 24 months, you’re looking at a decent amount of time before an address that CityFibre marks as RFS is even capable of taking up the offer. And since the majority of their build has been in the last 3 years, in many cases delayed by the whole COVID and supply chain situation, the 8% uptake doesn’t seem so bad!

    5. Avatar photo Oggy says:


      In their latest results Openreach have announced they have 3.5m users on a FTTP connection so, despite your anecdotal evidence, the figures look correct.

  2. Avatar photo Anthony says:

    You have got to give huge credit and kudos to them. They face losses and instead of panicking, withdrawing and crumbling. They go full on in. I really hope at the end of this CityFibre become a major player and successful.

    1. Avatar photo Ad47uk says:

      Me too and other Alt networks, so we have more choices.

  3. Avatar photo Carl says:

    “The operator’s latest annual accounts reveal that they ended 2022 in somewhat of a mixed position, with good network growth (2.2m RFS homes in 2022 vs 2.1m in 2021) and sharply rising take-up (174.4k consumer connections vs 60.9k).”

    @Mark typo here, should be 1.2m in 2021 based on accounts I think?

    1. Mark-Jackson Mark Jackson says:

      Correct, fixed 🙂

  4. Avatar photo Andrew G says:

    “sometimes it’s better to wait for a business to get into trouble before stepping in with an offer”

    Given the financial position of most altnets, what will happen is a game of chicken, as investors who don’t want to grow through consolidation hope to sell out at a profit before their own tolerance and cash runs out. For the consolidators the ideal scenario is for their chosen target to be in or on the threshold of administration, against which they need to balance the possibility of another buyer swooping in and snatching the target.

    In a febrile market like this we can expect plenty of rumours (accurate and inaccurate) about who might buy whom and for how much, and it could be very high stakes for all concerned – especially the creditors. The type of private equity investors who back much of this have multiple motivations and a “win some, lose some” acceptance. Most of the lenders are not in that space, and if they take a big write down then its bad news for somebody.

  5. Avatar photo Bob says:

    Like all the Alt Nets they are in a difficult position. Costs rising . build out slowing and take up low. Cost of servicing the debt is also increasing

    It all depends on if it can get good levels of take up. So far alt nets have struggled on that front

    I suspect over time that the price differential between FTTC and FTTP will disappear which should help to drive up take up

    The discontinuance of analogue land line should also help. A lot depends on timescales. If they cannot drive up revenues fast enough the debt may end up sinking them

    1. Avatar photo Jonny says:

      Openreach designating areas as FTTP priority might also help the AltNets in the same location – if any new ISP contract involves having someone spend a couple of hours putting the fibre in your house, drilling the wall and installing the ONT then moving to an AltNet is just as ‘inconvenient’ as staying with Openreach.

    2. Avatar photo Big Dave says:

      If the altnets pull their finger out and beat Openreach in being ready for service in any given location they could do well. 2 years ago Openreach were no more than 6 months between starting work and going live. 6 months ago Swish dug up the pavement run a duct and 1 cable between 2 poles and moved on and that was the last we’ve seen of them to date.

    3. Avatar photo The Facts says:

      @Bob – ‘The discontinuance of analogue land line should also help.’ How?

      ISPs/telecomms companies will provide an adaptor for the existing copper wires.

  6. Avatar photo JBK says:

    So Cityfibre are losing over £4 million per week.

    I’m sure I remember last year someone in Cityfibre’s upper management saying they would start making profit in 2023. It appears they’re still a long way off that.

    I understand they’re currently in the heavy investment phase but how long can they keep burning money at this rate? How long will investors keep pumping money in?

    1. Avatar photo Big Dave says:

      According to the Telegraph report the cost of financing their debt was 51million which exceeds their turnover. So it appears they are taking on debt to finance their existing debt never mind the cost of new builds.

    2. Avatar photo Andrew G says:

      Big Dave, according to these latest accounts, interest charge was £105,050,000 for last financial year (prev year was around £50m odd). Which is quite a lot compared to the £39,031,000 that they got paid by customers last year. And even that £39m didn’t go very far, because they made an operating loss of £65m before taking interest into account. I’d so like the altnets to be a success, looking at numbers like these its very difficult to believe they can grow their way to a financially sustainable position. Even if Cityfibre stop investing now, the balance sheet continues to swell at a current rate of £15m a month just from further accrued losses.

  7. Avatar photo John H says:

    Cityfibre’s sales/marketing department better start pulling their finger out.

    A lot of fibre optic had been laid, premises passed but they need to improve take-up rates, that’s the only way to start turning a profit. The investors aren’t going to hang around forever, watching their money being burnt.

    1. Avatar photo Ad47uk says:

      the problem is a lot of people are fine with what they have got and feel no need to move. I was the same, I only moved to Zzoomm to save money.

    2. Avatar photo Big Dave says:

      I would imagine that for most people if Netflix streams without buffering then that is good enough, therefore a decent FTTC connection is probably enough and there is little incentive to upgrade to FTTP.

    3. Avatar photo John Preece says:

      @Big Dave

      Yep, you’ve hit the nail on the head.

      The majority of UK households aren’t ready/don’t need ultra fast FTTP connections.

      So why disrupt your internet connection to have a company dig your garden to lay fibre to your house, a company that might not be around in a few months time.

      In my opinion, just stick with your FTTC for the moment if it’s fast enough for you.

      Wait for the consolidations and dust to settle, then when you need ultra high speed FTTP you can make a better decision.

  8. Avatar photo Mark Jackson says:

    One way for the sales/marketing department to improve would be to inform the public when it’s live in their area! They recently went live in my street, and no one has knocked on our door, or put a leaflet through the letter box. I would expect most of my street to be unaware they can get cheaper broadband via Cityfibre.

  9. Avatar photo Insider says:

    The RFS and connected customers is much higher YTD, they need another 180k customers this year for operational break even.

    I wouldn’t be surprised if CF are hoping to win more government contracts so they can stop private investment.

    1. Avatar photo Let's be serious... says:

      So Cityfibre have a debt of nearly £5 billion. There losing over £4 million a week.

      But by adding 180k customers they’ll break even.


    2. Avatar photo XGS Is On says:

      Think the Insider specifically said *operational* break even. Presumably meaning EBITDA break even.

      They don’t have nearly £5 billion of debt. They have a £4.9 billion debt facility but no idea how much of it they’ve drawn down as of right now.

    3. Avatar photo Let's be serious... says:

      OK, so Cityfibre have a huge debt (but no more than £4.9 billion) and they’re losing £4 million a week, but 180k more customers will turn everything around.

      Hmmm, let’s see how that pans out.

    4. Avatar photo Insider says:

      XGS is spot on, EBITDA break even.

      Also spot on to say they aren’t 5 billion in debt either, if EBIDTA break even is achieved the debt facility would be extended I’d assume.

      Problem is majority of operating costs are build staff, until they’re no longer required operating costs will high

    5. Avatar photo Big Dave says:

      As I understand it City Fibre’s current debt is £1.8bn. They have a total debt facility £6.8bn which only gets released as they build out to more properties. At the minute they are not getting enough revenue to service the interest on their current debt (as reported by The Telegraph).That means their debt pile is increasing just to service their existing debt.

    6. Avatar photo Howard says:

      @Insider As you said: “Problem is majority of operating costs are build staff, until they’re no longer required operating costs will be high”

      Cityfibre has a long way to go to reach their target of 8m premises, so the build staff are going to be needed for a long time and hence operating costs will remain high for a long time yet.

      The debt is going to get much bigger.

    7. Avatar photo Insider says:

      @Howard yes the debt will grow but as a city is built I’d expect more redundancies to build staff that’s within that build area.

      They are paid really high wages on the basis they know the contract won’t last forever.

      I think they will possibly move on BDUK jobs as I’ve seen a lot of these advertised after wave 1 redundancies

    8. Avatar photo Neil G says:

      @Insider… 180k more customers just to break even.

      Aren’t they in this game to make profit? That’s why the investors are in it. So they’ll need many more customers.

      And as they continue with the build they’ll need even more customers to break even.

      It doesn’t matter how you spin it, the sad reality is there simply isn’t enough customers to make it viable.

      They’ll just keep burning millions of pounds until investors say “OK, enough is enough” then pull the plug and look for the best exit strategy. But I guess, behind the scenes, that could be happening right now.

  10. Avatar photo It's going to end in tears... says:

    As someone famously said… “It’s going to end in tears”.

    Unfortunately it’s going to be the many hard working, lower ranking employees who suffer when it all goes pear shaped. Many of whom will have young families and mortgages.

    The fat cats, generally older employees with large salaries, bonuses, large pensions, will disappear to enjoy their retirement.

    1. Avatar photo Bob says:

      City Fibre does not employ any staff. Even the directors are paid by a another company

    2. Avatar photo George says:


      If Cityfibre don’t employ anyone how did they make 20% of their employees redundant earlier this year?

  11. Avatar photo Yorkie says:

    If only CityFibre could actually install the service where and when they say it’s available, and had a reasonable approach to customer relations. In York — the flagship city — I’ve been chasing this for a year. Over six months, two installations via CF were cancelled because they can’t get their act together. Infrastructure has been installed inside and out of the buildings, but it’s not working properly. Several neighbours have had their installation also cancelled for similar reasons.

    No timelines, no **** given on formal complaints. CF installation engineer told me recently that the cabinets don’t work nor do they provide enough capacity for all the apartments. CF tell me I’m not their customer, but keep sending letters that “I’m missing out”. Vodafone, on the other hand, just hang their hands in the air: they can’t do anything.

    1. Avatar photo I feel your pain says:


      Having read the many, many similar complaints on Cityfibre’s Facebook page I can understand your pain.

      Best to just stick with a well known, reputable service provider.

    2. Avatar photo Bob says:

      City Fibre are correct. You have no contract with City Fibre. You have a contract with your ISP. Any redress is through them.

  12. Avatar photo Andy says:

    Virgin Media have just announced 2000 job cuts, reducing overheads and staff numbers in preparation for the purchase of Cityfibre.

    1. Avatar photo Flame Henry says:

      They’ve already started moving customers over to CityFibre in prepartion for the purchase via multiple strategic price hikes.

    2. Avatar photo Facts says:

      @fake news Henry – VM aren’t event a Cityfibre customer…

    3. Avatar photo J wil says:

      That would be a death nail of city fibre if vwo2 took it over since it’s now owned by a American company it’s been rated the worst provider they will hang up on you after hrs of waiting they will lye to you and rip you off near impossible to end your contract and send balliffs around for made up depts put extras on saying you asked for it u only need to look on fb virgin complaint group everyone is trying to leave they have the most complaints with the obdsman

  13. Avatar photo Jeffery P says:

    Cityfibre have dug themselves into a very deep, expensive hole and it’s going to be extremely difficult to climb out of.

    Since they started digging the hole there’s been many changes, changes that aren’t in their favour; competitors overbuilding and reducing prices, slow customer take up, high inflation, increasing interest rates, etc.

    What started out as a business plan that looked impossible to fail, is now looking shaky.

  14. Avatar photo Kris says:

    I’ve read through their financial statements and the net loss on its own isn’t really an issue. They aren’t expected to be profitable given they are spending billions on expanding the network and have already secured financing relating to this. This is the same for most businesses in the customer acquisition phase.

    What is concerning is the customer numbers vs ready for service – to me cityfibre connection is preferable to openreach/virgin and yet they don’t have that great a take up rate.

    Also the one off adjustments to revenue is really concerning. It’s a huge overstatement in previous revenue and isn’t really very well explained in the reported results.

    Maybe if they built in my area I’d be more optimistic /s

  15. Avatar photo More surfing required... says:

    2.2 million homes ready for service.

    Connected customers has “surged” to 174,000.

    That’s take up of 7.9%.

    Let’s be honest, it’s not going to work is it. Quite a bit more ‘surging’ is required.

    1. Avatar photo Claire says:

      So take up has surged to 7.9% and Simon Holden says he’s happy where cityfibre is???

    2. Avatar photo James says:

      @Claire. Ask the investors if they’re happy with 7.9% take-up.

      I don’t think so… 🙁

    3. Avatar photo Anonymous says:

      Maybe this is the reason behind wanting to purchase the smaller altnets,is their take-up higher, many of those companies build to demand (on a smaller scale) and generally have the service rolled out nd turning a profit pretty quickly. Unlike Cityfibre who appear to have just built everywhere instead of getting an ISP and then making sure the ISP sells aggressively and tying in with Cityfibre to prioritise build areas.

  16. Avatar photo Bob says:

    At the moment debt is increasing far faster than revenues. The public accounts always makes it difficult to establish any real detail. They look to be a very long way to closing the gap between debt and revenues in fact at present the gap is still growing and not closing

    At the moment the alt net market is far to fragmented and it going to have to consolidate . I would say no more than 3 will survive long term. Who thewy will be remains to be seen

    The market will probably follow the old cable TV markets where slowly they ale consolidated down to one company. The consolidation was slow ad painful as there was little standardisation of the networks. Cable TV in the UK was also later to the market and was almost redundant with Satellite and Broadband negating the need for it

  17. Avatar photo Days are numbered... says:

    With such huge debts and very poor slow/low take-up rate, I would say Cityfibre’s days are numbered. It’s simply not sustainable.

    Yes, the huge debts are to be expected during this build phase but take-up rates are far too low.

    I’m guessing the owners/investors are looking to exit.

  18. Avatar photo Anonymous says:

    The issue with take-up doesn’t need to eb as painful as it has been / is, most of the people i speak to daily (i work in this industry) is people not knowing when the service is available, and mixed messages saying its available when it is not and vice versa. How can people use a service when they have no accurate information. You wouldn’t see supermarkets pumping money into advertising saying xyz is available now and when you went to the shops it wasn’t even in store yet. People are screaming out for this service but there is no accurate data out there.

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