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Airband Accounts Give Context to Recent UK FTTP Build Slowdown and Job Cuts

Monday, Mar 11th, 2024 (9:14 am) - Score 4,280
Airband-Engineer-Walking-Up-Cobbled-Street

Broadband ISP Airband, which previously aimed to cover 400,000 UK premises in rural areas via a mix of fixed wireless access (FWA) and full fibre (FTTP) networks by 2026, has finally published their company accounts – over 2 months late – and given context to the recent redundancies and build pauses.

The operator has spent the past few years expanding their broadband network across 15 UK counties, including parts of Wales, the South West, the Midlands, Cheshire and Oxfordshire. As part of that they’ve also scooped up various state aid (Building Digital UK) funded deployment contracts from the government, such as around Shropshire, Devon and Somerset.

NOTE: According to the Amber Infrastructure Group’s update in July 2023 (here), Airband’s network had reached over 290k Homes Passed (of which 215k FTTP and 76k FWA). But Thinkbroadband estimates the FTTP figure to be upwards of just 91,000 (RFS).

Unfortunately, the company, like so many other alternative network operators in the market right now, are not immune to the wider pressures (e.g. rising built costs, competition from rivals and the difficulties of securing fresh investment in a high interest rate environment etc.) and recently completed a “period of restructuring”.

As we reported in January 2024 (here), the outcome of Airband’s restructuring seemed set to cause some redundancies and a build slowdown, with the operator being expected to focus on growing customer take-up instead. But at the time of that article, this process was still ongoing, and the operator thus declined to provide any further details.

Airband’s Accounts

The company has now published their latest accounts to the end of December 2022, which also helps to underline the financial challenges they’re facing in the most recent 2023/24 period. Firstly, it’s worth noting that Airband had 485 employees in 2022 (up from 338 in 2021) and they invested £71m into their network during that same period (up by 109% on 2021), although we expect both of those figures to fall post-restructuring.

Summary of Key Airband Figures to Dec 2022

➤ Revenues reached £3.439m (up 28% vs 2021), but the cost of sales was £(4.046m)

➤ Operating loss of £(20.972m), which is double the £(10.515m) recorded in 2021

➤ Total assets of £151.14m (up from £76.34m)

➤ Total liabilities of £(116.41m) (increased from £(52.39m))

➤ Shareholder funds of £34,730m (up from £23.954m)

The accounts note how “the Directors are confident that the restructuring and operating expenditure can be managed within the funds available to 31st July 2024 and that further strategic funding will be secured to allow the Group and Company to continue in operation for at least until March 2025. On this basis, the Directors have concluded that it is reasonable to assume the Group and Company are able to adequately fund its operations for the foreseeable future.”

However, at the time of these results it was also noted that the necessary requirement for “further strategic funding … has not been identified and secured” (P17), while “additional funding from its major shareholder, which may be needed in the period to 31st July 2024 has not been guaranteed.

In short, the accounts state that there is still a “material uncertainty that may cast significant doubt about the Group’s and Company’s ability to continue as a going concern.” The complexity of this situation is given further depth in the report’s summary of post balance sheet events, below.

Airband-Dec-2022-Accounts-Post-Balance-Sheet-Events

Suffice to say that much will depend upon Airband’s ability to secure additional investment by August. The statement above and talk of “incurring contractual penalties” might also be something that impacts some of their state aid supported roll-outs, although Airband hasn’t been specific. We have asked the operator to comment.

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Mark-Jackson
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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Comments
30 Responses
  1. Avatar photo Big Dave says:

    Making the assumption that each employee was paid mininum wage (which started at £8.91PH and went to £9.50PH so let’s assume an average of £9.20 in that period) and worked an average 40 hour week the wage bill alone came to £9.28m + employers NI contributions so they were barely taking enough to cover a third of wage bill alone. I’m no accountant but I just don’t see how companies like this won’t be sunk by their debts and interest compounded on them before they ever have a chance of becoming profitable.

    1. Avatar photo Anon says:

      Yep, what a ridiculous headcount. This is P&L basics and shocking that existing Directors and Investors have driven/supported/approved such a reckless approach. If they want more investment, they’ll need to get those people out of the way.
      I feel sorry for the less senior people who are probably very good at their jobs.

    2. Avatar photo An(other)on says:

      Another altnet based in the SW (but not the extreme SW 😉 ) topped out with a headcount a good bit higher than that.

    3. Avatar photo Big Dave says:

      This is the other issue that barely gets mentioned is that having multiple altnets rather than 1 single consolidated network is that of all the staff duplication required across the networks. It’s inherently inefficient.

    4. Avatar photo Anonymous says:

      Actually I partly disagree.

      Quite a lot of the head count will be allocated to the build and so not an operational cost. That’s why you see sudden redundancies as alt nets pause their builds. The payback period is long on infrastructure so it’s not unusual.

      Key now is driving up revenue on the built assets. It doesn’t look good for them there and will be difficult for them to secure more investment to cover their running costs.

    5. Avatar photo Anon says:

      Yep, I get that about longer-term operational costs view, but it’s still a ridiculous and unnecessary fixed headcount to have taken-on.

    6. Avatar photo Guy Cashmore says:

      Unfortunately the user experience here in Devon/Somerset has been awful, nobody is recommending them, as soon as alternatives become available customers are leaving, the chances of obtaining more revenue from the existing assets here while Airband are still running them is about zero.

    7. Avatar photo WaitinginDevon says:

      Employee costs came to £18.3M after £9.9M was capitalised as z network build.

      Rather than asking Airband for comment should ask CDS as they backed them from the start with massive contracts, presumably not going to plan?

  2. Avatar photo carlconradw says:

    FTTP by Altnets is turning into a modern-day South Sea Bubble. The companies’ true values are likely to be well below their asset base, since at the end of the day it’s all down to turning build into profitable customers. My own background is in private equity and we have steered clear of this misplaced euphoria.

    1. Avatar photo Big Dave says:

      The Original cable TV companies (NTL/Telewest etc) effectively went bust before being absorbed into Virgin Media, and this was at a time when BT was legally prevented from using its network to compete against them. No such protection is offered to the altnets, there’s 2 established players they are up against. You just assume someone is waiting in the wings to buy up bankrupt assets on the cheap and making it work that way.

    2. Avatar photo Bob says:

      The economics for most of the altnets does not look good. The UK has only managed to support one cable TV company and one satellite TV company and both of them may be under threat from the streaming services

      The Altnet market is simply to crowded an most will not survive. A lot of the altnents were targeted small areas that were not really economic for he larger players but those areas are costly to supply and takeup may be low

      Other than Openreach who will survive is hard to predict at present

  3. Avatar photo MikeP says:

    So that’s CDS Lot E, Cluster 11 definitely dead then, seeing the mention of contractual penalties as well. Already knew they hadn’t started the design, with a scheduled RFS of Q2 2024, so that wasn’t going to be met.

    1. Avatar photo Will says:

      I’m in Lot 3 Cluster 10 with an even earlier forecast completion date of Q4 2023, but still not live…

  4. Avatar photo elBison says:

    Sadly it seems they got rid of their support staff. Rather annoying when the customer has to explain what CG-NAT is. Also, why aren’t ISPs required to inform the potential customer that they use CG-NAT?

    1. Avatar photo MikeP says:

      You can guarantee that every new-entrant ISP will be using CGNAT for IPv4, given the cost of obtaining any public address space.
      More important is to confirm IPv6 is available (Airband have a whole page explaining why you don’t need it – https://www.airband.co.uk/knowledge-base/does-airband-support-ipv6/ . Sigh.)
      ISPs will be trying to keep the cost of their CGNAT kit down, which of course translates to a throughput hit. IPv6 avoids this – and also shows an ISP that’s thought ahead – the more traffic they push to v6, the less CGNAT performance they need.

  5. Avatar photo Helen says:

    I don’t understand why airband deploying in already upgraded areas. Such as overlaying jurassic fibre in taunton…or wildanet in ashburton … its rife…

    1. Avatar photo Big Dave says:

      It’s madness, we have 4 networks working in the town where I live including Openreach. Competing against the incumbent players is tough enough without going up against each other.

    2. Avatar photo Guy Cashmore says:

      Same here in rural West Devon, Airband FTTP has overbuilt where OR FTTP already exists and this itself was overbuilt where Airband FWA was supposedly available, you couldn’t make it up!

  6. Avatar photo Big Dave says:

    Interesting article in PC mag seems to suggest that in the USA fixed line internet companies are losing market share to 5G so instead of going from copper to fibre some are going from copper to 5G.

    https://uk.pcmag.com/wireless-carriers/151373/5g-home-internet-soars-in-2023-as-cable-and-phone-based-broadband-slump

  7. Avatar photo Airband follower says:

    There are some truly scary numbers in the detailed accounts –

    Revenue – £3.4 million
    Operations cost – £24 million
    Staff costs – £14 million (£43k per employee)
    Finance cost (i.e. servicing their existing debt) – £4 million

    I’m not an accountant, but that looks like basket-case economics to me!

    If we assume the typical customer pays £30 pm for their service, that divides out as fewer than 10,000 customers, and their customer income doesn’t even pay the debt interest.

    Despite that, the highest paid director still managed an 8.7% remuneration increase to £261k. That’s £800k over 3 years, during which time the company has lost around £40 million…

    1. Avatar photo jim says:

      The holding company uses a ARPU figure of £23

    2. Avatar photo Big Dave says:

      “Despite that, the highest paid director still managed an 8.7% remuneration increase to £261k. That’s £800k over 3 years, during which time the company has lost around £40 million”

      Nice work while you can get it. Enjoy it while it lasts.

    3. Avatar photo Airband follower says:

      Something doesn’t add up here. I don’t know what a typical FTTP take-up is in poorly-served rural areas, but let’s assume it’s only 30%. If they have passed 215k premises as they claim, that’s 30% of 215k times £23 pm. On my calculator, that’s a potential income of around £18 million pa, not the £3.4 million they report. Even allowing for the fact the coverage is 2023 and the income 2022, that’s too big a difference to reconcile. The much lower coverage reported at the top of the page looks much more credible than the Airband claim.

    4. Avatar photo Big Dave says:

      “NOTE: According to the Amber Infrastructure Group’s update in July 2023 (here), Airband’s network had reached over 290k Homes Passed (of which 215k FTTP and 76k FWA). But Thinkbroadband estimates the FTTP figure to be upwards of just 91,000 (RFS)”

      That’s a hell of a discrepancy.

    5. Avatar photo Bob says:

      It depends the debt cost many be over several years or more. Not clear how they are removing the initial build costs but typically they are revolvered over several years build costs even then taking those cost out of the equation it is doubtful they are making much money if any

      A 30% take up I would suspect is highly optimistic. 20% will be nearer the mark

    6. Avatar photo Jim says:

      They have approx 12-13k customers at Dec 2022

      None of the larger AltNets have takeup at 30% or anywhere close – 5% with a few getting closer to 15%

  8. Avatar photo Airband follower says:

    That’s not comparing apples with apples, though. The larger altnets generally operate in bigger towns and conurbations, with extensive overbuild and competition with good VDSL. Airband get most of their grants for areas that are not currently superfast and with no commercial plans to make them so.

    If their main competitors are 4G, Starlink, or 10 Mb/s VDSL, they should be able to get much higher take-up for FTTP if they properly exploit their first-to-market advantage. Unfortunately for them, their older FWA product doesn’t have a great reputation, so has tarred the company image.

    1. Avatar photo Jim says:

      Most of their FTTP coverage isn’t really that Rural… big parts in Tiverton, Taunton etc – stretching out from there, but most of the proper rural bits of their contracts in Devon & Somerset haven’t been started… will they ever?

    2. Avatar photo Will says:

      I’ve noticed that too, Jim. It seems like only the urban rollouts have actually gone live in my part of Devon, the rural areas haven’t…

  9. Avatar photo I'm here for it says:

    The Senior Management of Build has a big responsibility for what’s happening. They have sunk it to the ground with poor management and sliding money into their pockets through dodgy business with their subcontractors with zero skills hired for the sole purpose of putting money into their own pockets. Businesses that worked with Airband know this is true. It’s an open secret yet no one address it.

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