Administrators Report Updates on Future of Broadway Partners
The administrators for troubled UK network operator Broadway Partners (Broadway Broadband), which had been building fixed wireless and full fibre (FTTP) ISP networks across rural parts of Scotland and Wales, have published their first report and revealed that several interested parties have bid for the business.
Just to recap. Broadway – supported by a major investment of £145m from London-based sustainable investment manager Downing LLP (here) – was ultimately aiming to cover 250,000 premises with its new full fibre network by around 2028. But so far most of the builds have only been focused upon smaller rural communities across different parts of Wales and Scotland (e.g. Isle of Arran, Pembrokeshire, Monmouthshire and Powys).
However, alternative network providers across the market have recently been feeling a lot of strain, particularly from rising costs / inflation (build, leases etc.), aggressive competition from rivals (e.g. overbuild) and the related need to secure a viable level of take-up by consumers. As a result, we’ve recently had to cover quite a few news stories about redundancies and slowing network builds.
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The same appeared to be true of Broadway after the company announced, in May 2023, that it had officially appointed Teneo Financial Advisory as its administrator (here). Benji Dymant, Joint Administrator at Teneo, confirmed all this when he said that the provider had been “facing … a number of adverse macroeconomic issues, including raising interest rates and inflation, in a highly competitive environment.“
Administrators Report
The first administrator’s report has now been published and represents somewhat of a progress update, albeit one without a firm conclusion. The report notes that Broadway services over 11,000 homes and over 7,500 Ready for Service (RFS) fibre connections, with c.1,000 fibre customers and c.1,000 wireless customers. But it became apparent at the end of May 2023 that “the Group would be unable to pay its debts once they fell due.”
“Despite having successfully connected a range of outlying communities to its network, BPL struggled in the face of adverse market conditions. This resulted in a slow-down in their ability to build new connections and secure the customer base needed to satisfy the milestones and continue to drawdown on its debt facilities,” said the administrator.
According to the report, there is currently also “no prospect of any funds being returned to unsecured creditors of either the Company or the LLP“, and, in respect of that £29m mentioned above, they “do not anticipate there will be sufficient asset realisations to repay the Secured Creditor in full from either fixed or floating charge realisations.”
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Prior to administration, the company had employed 119 staff, but 72 were made redundant immediately upon the administration. In terms of the sale process, Teneo said that 27 out of 58 parties initially identified as having an interest in the sale were invited to take part. An unspecified number of bids have since been received and a target completion date of 31st July 2023 has been set, after which we may learn the final outcome.
As we’ve said before, speculating on potential suitors for Broadway is difficult due to the operator having several very geographically distant deployments, which may make it more likely that parts of their network end up being sold off to different parties (i.e. finding a single buyer for everything seems like it could be tricky).
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, BlueSky, Threads.net and Linkedin.
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I imagine we should expect to see more articles like this over the coming years.
It’s very sad for the workers who get shafted when the owners of these alt-nets max out the credit card.
Hopefully other alt-nets can salvage parts of the network and save some of the jobs at Broadway.
If they hadn’t maxed out the credit card, then there wouldn’t be any altnets in the first place. Gold rush, bubble, crash is a standard pattern of growth when regulation, technology, or subsidy makes a new opportunity appear that has apparent massive growth potential.
Those losing their jobs are at least getting their P45 at a time when there’s labour shortages in a lot of sectors. Most of those people have had a well paid job for a year or two, and built up good, transferrable business skills. Somebody is going to have to build Nexfibre’s network, and somebody is going to have to build VM’s XGS-PON assets, somebody is going to have to build the various project Gigabit tranches, so I would suggest there’s plenty of jobs for a few years yet in telecoms network build.
Come on, there’s max’ing out your credit card and there’s not having a commercial bone in your body. Even the fibre market can’t defy gravity! Senior Management Team and Investors both asleep at the wheel here. Really sad for probably some amazing staff and hopefully they will bounce back in new roles somewhere, but P&L tells it all,… which muppets thought there was a growth strategy focused on rural, this level of income and 119 staff!?
Question is if the investors get their fingers burnt badly will they steer clear of the sector altogether?
Complaining about the business model and the management misses the point. Early stage investors like risk! If there isn’t plenty of risk, there’s no prospect of high returns. These investors take a portfolio view – some of their bets pay off big time (perhaps 5x the original investment), some are a lot more modest, and a good few crash and burn, with either only a partial return, or possible nothing at all. But as a portfolio that involves investments in other sectors, what are they aiming to beat? I’d suggest a minimum 20% return is what you’d want across the entire portfolio, and that’s about doable. The fact that altnets seem to be an investment that won’t be a big winner for most investors doesn’t undermine the logic at all. If it were easy to pick high return winners, don’t you think everybody would do that?
Big Dave does have a point – if sufficient people get burned, then there becomes a rush for the exits, with too many people trying to get out at once, valuations crash, and you have a classic market bust. Most but not all of the “investors” here are actually fund managers – ie they aren’t playing with their own money, but are playing with the money of people who have chosen to put money into high risk high growth funds. A good chunk of my personal pension is in smaller companies and high growth (risk) funds, I see better returns over the longer term, but more volatility and less liquidity than if I invested in a big company tracker fund. When the going gets tough, some of the ultimate investors get scared and pull their money. If the investors start pulling money, the fund managers will decide they can’t keep bankrolling a loss making company – bearing in mind it’s a portfolio – so they’ll stop putting money into the ones that look least favourable. Note that they probably always expected the company to make these losses, the hope was that somebody would come along and pay even more to buy the company with its assets and the (hoped for) growth story.
But even then, if sufficient investors panic and sell up, and altnet valuations crater, the real risk-money will be waiting, looking to buy assets up for a fraction of their value. If you’ve ever been looking at investment funds, those funds are often called things like Mongo Special Situations Fund 4 – special situations is the polite term for vulture funds, who’ll spot value in chaos and corporate death.
Thanks for the patronising Investment for Dummies Andrew G. There’s high risk and portfolio investment, and there’s down right commercial management stupidity. That’s the case here.
Saying it’s all okay, because “that’s the way these markets need to evolve” actually misses the point!
Bill Jacobs: “There’s high risk and portfolio investment, and there’s down right commercial management stupidity.”
You really think that before every one of these companies was gifted millions of pounds, that none of the investors asked for a business plan? And that they didn’t then do their own due diligence, their own modelling across a range of scenarios that would have featured assumptions across interest rates, growth, competition, customer takeup, churn etc? And that management were written a blank cheque? And investors kept handing out the cash without any checks on progress? I’ve managed both capex programmes and M&A in the multi-hundred million range, and I can assure you that financiers are VERY thorough, but that’s not the same as taking no big risks.
The logical, safe choice would have been not to build any altnets, and keep the money under the mattress. Going back in time, the same attitudes would have meant no industrial revolution, no railways, no mass manufacture etc etc.
AG “I’ve managed both capex programmes and M&A in the multi-hundred million range…” but what about a rapid growth strategy appropriate P&L? I don’t know. I have, hence my comments. Please respect them instead of being so patronising.
You seem to think I’m against hi-risk investment, progress. Nothing could be further from the truth having been involved several funding rounds and operating a company in this sector.
My point here is; Broadway was a particularly recklessly OPERATED plan, irrespective of how good it looked and well it was reviewed for investment.
They brought in too many chiefs that didn’t have a clue what they were re doing and brought the company down
Ĺot of companies like that.
One by one, the inevitable happens. Who’s next?
It’s a shame but everyone can see it coming, rising inflation and interest rates aren’t helping.
@Who’s next
I’m betting it’ll be Cityfibre.
Of course the management keep saying everything’s fine and on track but it appears their debt is spiralling out of control, burning money faster and faster while take-up isn’t improving quick enough.
TalkTalk is one of Cityfibre’s big customers, if they break up (as is expected) that will put immense pressure on Cityfibre. There’s a huge amount of money riding on them.
Too much pressure and the investors will exit.
Cityfibre could be sold easier if broken up and sold in smaller parts, area by area.
“Cityfibre could be sold easier if broken up and sold in smaller parts, area by area.”
I doubt that. If I were a Cityfibre investor I’d be holding my nerve, because the business model (largely MDUs) is a good one. If the investors do cut loose, then they’ll want a clean break – sell the lot through a controlled sale process ideally to a single bidder, if CF went into administration then there would be plenty of investors wanting to buy all the assets as a block.
@Andrew G… Not if the block included areas that overbuilt your existing network.
Why purchase infrastructure in area that you’re already covering?
Who says the sale of Cityfibre isn’t already in progress?
Nudge,nudge,wink,wink…
These Alt nets really need to push their services, not just stick a leaflet in the letterbox. I know advertising is not cheap, but we have a local paper, so stick an advert in that now and again or on local radio.
I chat to people who have no idea who zzoomm is, even with their vans going around the city.
It is great that we got competition, I have been wanting it for years here, now we have it, hopefully it will keep going.
The one thing here that will help Zzoomm is that it is only Out of reach here, and I doubt any other provider will come here, the city is not large enough.
I think a large part of the issue is the poor show and screw-ups from DCMS. they constantly change the goal posts making it difficult for any alt net to reliably roll out. But the question is, how dis they sign off on the financial of broadway. 2000 customers and 137 staff. Doesn’t seem to add up…. But yet they kept giving public money.
Based on feedback at connected Britain- seems broadway saying they are out of admin today ? Sure something will
Come out worth asking