Broadband ISP Zzoomm Slows UK Full Fibre Build and Warns of Job Cuts UPDATE
Oxfordshire-based alternative network provider and ISP Zzoomm, which originally aimed to cover 1 million premises with their FTTP broadband network across 85 UK towns by the end of 2025, has today notified ISPreview that “new network construction is stopping” (some existing work will continue) and redundancies are expected.
The operator, which is being fuelled by an equity investment of £100m from Oaktree Capital (here) and a £100m debt facility via an international banking consortium (here), has generally focused their rollout on smaller towns in parts Berkshire, Oxfordshire, Herefordshire, North Yorkshire, Staffordshire, Wiltshire, West Yorkshire and Cheshire.
However, back in May 2023 we noted that Zzoomm were reportedly understood to be laying off up to 300 employees in its construction team (here), which was said by one newspaper to reflect about 50% of their workforce and would inevitably impact their pace of build.
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The situation is likely to have been fuelled by some of the same challenges that are hitting many other operators, such as rapidly rising build costs, aggressive competition from rivals (e.g. overbuild) and the difficulties of securing fresh investment during a period of high interest rates etc.
The sad news today is that Zzoomm have seemingly notified of more redundancies and the decision has been made to re-focus away from new fibre build, although they will “selectively continue to build on a local case-by-case basis.” But the latter only seems likely to be focused on their existing network areas (e.g. infill, customer installs and or ensuring all existing build is made ‘Ready for Service’).
Zzoomm’s Statement to ISPreview
“You may have seen that Zzoomm’s new network construction is stopping and as such we are making changes to our organisation, which unfortunately means that some of our colleagues in our network construction and support areas will be leaving.
We will selectively continue to build on a local case-by-case basis and continue to release many more homes where new customers can experience our service.
Zzoomm continue to invest adding new people in the marketing, sales, customer service and field service functions to support the continued rapid growth in happy customers.”
Despite the obvious challenges, Zzoomm remains confident about the future and is pleased with the customer growth they’re seeing (it’s growing by around 1.5% penetration each month). Suffice to say that the operator is choosing to play it safe and focus on growing take-up rather than rapid network expansion, which is likely to continue until such time as they’re able to raise fresh investment, assuming consolidation doesn’t bite first.
The catch is that you can’t slow a build without inevitably cutting some jobs, and this would appear to be the second such batch of redundancies since last year. We have asked Zzoomm if they can clarify how many staff are likely to be affected and will report back when there’s a response.
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Customers who take their residential service typically pay from £29.95 per month for an unlimited 150Mbps (symmetric speed) package on a 12-month term with an included router, which goes up to £64.95 if you want their top 2Gbps tier. The ISP is also offering a £100 Amazon gift card to new customers.
UPDATE 5:59pm
Zzoomm has kindly informed us that they’ve now got just over 23,000 customers and a little over 190,000 premises passed (RFS).
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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Another altnet ripe for consolidation. Like BRSK and Fern it has very little overbuild with CityFibre.
Certainly, but honestly these are bigger numbers (RFS) than I assumed. 12% takeup at stop build point is not terrible and if they can get themselves to 20-25% (e.g 50K subs) overtime, which is easily achievable if no new competitors then they’ve got a sustainable business even standalone. This is small, but sustainable isp size and nothing wrong with that at all.
Look at Sandhurst – Openreach, Virgin/Nexfibre, Swish, Trooli an Zzoomm. They must have spent millions digging up the streets when PIA was available
I think CF will end up with this one.
I also think CF’s game is build a decent base then sell, probably to Vodafone.
And you and other Out-of-reach fanboys would love that, you love the idea of having just a couple of networks in the country.
I don’t get people in this poxy country, I really don’t. A company tries to do better, have a better network than the rubbish that Bloated toad have been giving us for years, and you don’t flipping want it.
i suppose your shares in these big companies are more important.
@Ad47uk
The money didn’t pile money into these altnets because they were desperate to bring the UK better internet. They did it because they thought there was a quick buck to made (mostly I imagine by selling them on in quick order). Should we have sympathy if it goes t*** up for them? Not For me. You can see by the recent Cuckoo story and the endless pole confrontations that the customer is at the bottom of their priorities.
‘I don’t get people in this poxy country, I really don’t. A company tries to do better, have a better network than the rubbish that Bloated toad have been giving us for years, and you don’t flipping want it.’
You only went with them because of pricing. You were quite happy with FTTC and had no interest in their better network as FTTC was fine and having FTTP installed was inconvenient. You spent months banging on about how pointless FTTP was at every opportunity.
Your interest remains pricing. I’m not convinced you’ve any right to lecture others on appreciating a better network, what they should and shouldn’t want, etc, when your main criteria is how cheaply you can renew, whether the pricing is sustainable or not.
https://forums.thinkbroadband.com/fibre/t/4752383-re-cost-of-going-back-to-fttc-in-future.html
You haven’t once mentioned network quality or performance as a reason for using altnets, all you have written about is value and pricing.
If Bloated Toad, Vermin Media or one of the others on your infant school insult list are delivering that who cares about Zzoomm?
I would advise anyone in the alt net isp industry to get out asap. There can only be one winner unfortunately
Me? 🙂
Is the winner Dave the Hat?
> I would advise anyone in the alt net isp industry to get out asap
That’s exactly what they’re all trying to do. Stop burning capital, try to gain some more customers on the already-built network, in the hope that someone might want to buy them out.
If Zzoomm has 23K customers @ £30 per month, that’s £8.3m p.a. gross sales, from which have to be taken the costs of running the network, customer service, sales, billing etc, and whatever’s left is supposed to repay capital outlay of £200m ?! Not a great proposition at the moment.
@555 You are forgetting to take
20% off your top line for vat
The public accounts show them making a loss and are dependent on funding from parent company in order to continue to trade
They face the challenge nearly all the Altnets have of high infrastructure costs, High levels of debt and slow take up and increasing competition for customers
Ha ha ha
@Jeremy! No! Just Dave The Hat!
Another money laundering investment into a new altnet which wont last..
clearly someone that works for BT hah
Zzoom added loads of customers with cheap deals 500mb for £25 but now they have hiked their prices new customers taking it up will slow.
They have not hiked their prices, they just put them back up to normal prices. Their prices are no more expensive than others, the only reason larger providers are cheaper is that they keep giving offers to people to keep them.
I hope Zzoomm keeps going, I certainly don’t want to go back to Out of reach if I can help it.
Surely, your adolescent wit means that you should now be referring to Zzoomm as Ddoommed?
Oh my.
‘Their prices are no more expensive than others, the only reason larger providers are cheaper is that they keep giving offers to people to keep them.’
https://forums.thinkbroadband.com/fibre/t/4752383-re-cost-of-going-back-to-fttc-in-future.html
The thread is titled ‘cost of going back to FTTC in future’ and the guy who wrote the above about larger provider offers to keep customers wrote:
‘I may be in the same situation in July, depending on what Zzoomm can do for me’
I mean say whatever you like just don’t expect not to be pulled up for moaning about the attitudes of others on here while being a raging hypocrite.
i’m sure the regular commenter who loves to talk about how great zzzoooooommmm are compared to BT will be delighted to hear the news.
It is certainly going to be interesting to see how the alt net sector develops – it turns out that severely undercutting the big boys (even if it is symmetric!!!!) is not working
Yes, where is anonymous when you need (insert whichever pronoun is preferred)?
It’s not undercutting, it’s over build and construction costs mainly. The latter which has been stung by inflation.
I doubt any Altnet is pricing at a loss. As I keep saying, there are so many Alt Nets overbuilding eaachother in towns with 20 – 30k properties. That isn’t viable. In areas with 80k+ where 4 providers can have at least 20k each its fine. Not small towns unless you only need a take up rate of 10%.
Even the 90s cable companies couldn’t make it work, and they had everything rigged in their favour – BT couldn’t provide TV services and was discouraged from rolling out its new fibre network, and there was no such thing as LLU back then either.
The altnets have to deal with Openreach being allowed to fully compete, and now a resurgent Virgin Media attempting to join the wholesale market. Both companies have (or will eventually have) a network that uses identical technology and can provide all the same services as any altnet.
Don’t see how the size of the town matters. If you’re all digging up the same streets then you’re all competing for the same customers, whether it’s a village or central London.
> The altnets have to deal with Openreach being allowed to fully compete
Actually not true: Openreach have regulated pricing from OFCOM, at least for the base 40/10 FTTP product, which means they’re not allowed to cut prices to compete with the altnets.
For many altnets, their business model has been based *entirely* on undercutting Openreach at wholesale, by cherry-picking the cheapest to build areas (e.g. Cityfibre), and/or building before OR get there.
For a few, it has been to deploy in more difficult areas where the existing copper service is poor and people are prepared to pay a premium for fibre (e.g. Gigaclear).
In the long term though, OFCOM is not going to be able to justify keeping FTTP pricing from Openreach artificially high.
The stupid thing was allowing altnets to overbuild each other in the first place. It was always going to be a tough nut to crack with 2 established players to compete aginst. The problem is if you have 4 players or more it may work if the pie is divided equally but it’s unlikely to happen like that. Customers will always gravitate towards established names and the others will just be dining on the scraps. Free market competition in this area may sound good in theory but in reality it needed to be single national brand with a recognised name.
the pricing is regulated, but Ofcom is clearly willing to work with Openreach as needed – eg Equinox and other regulatory changes for OR’s business case to make sense, much to Greg Mesch’s annoyance.
This is perhaps borne out by certain ISPs, notably Sky, remaining OR exclusive and not chasing every altnet going.
That is different to previous rounds where BT was firmly knobbled to ensure the “competition” can “compete”.
I have friends who have chosen to stay on BT FTTC (SOGEA in 1 case) even though altnets have passed their houses because they want to stay with BT and they are satisfied with what they have got (although they will upgrade if Openreach passes them). Shows how just a tough nut this is to crack for the altnets.
“Yes, where is anonymous when you need (insert whichever pronoun is preferred)?”
Fret ye not, I’m here. And here’s my thoughts on the matter:
Zzzzoooooooooommmm..zzm..zzzmmm…POOOOMMMFFFFFF!
Sadness…
The future for most Altnets cannot be great, Cable TV consolidated. You need a high level of take up to suceed and most will not achieve that. The Royal Mail has the same problem far fewer people have letters delivered so the economics no longer work
Another one bites the dust
Another one bites the dust
And another one gone, and another one gone
Another one bites the dust
Hey, I’m gonna get you too
Another one bites the dust
That’s going to be playing in my head all afternoon now……LOL
For gods sake! I’ve just driven past Zzoomm building about a mile and a half from my house – Looks like the same as CF they are going to stop!
They never had any intention of going into the town itself. Have a look at their coverage maps. Smaller market towns and suburban villages are their thing, not overbuilding existing Openreach, VMO2 and CityFibre.
They’ve recently laid cable in our area over the past few months and hoping to go live sometime this month.
Wonder if that will still go ahead and whether or not it would be worth migrating to them.
The only thing with large scale consolidation likely to be around the corner the company you sign up with now may not be the one you end up with. I’m signed up with BT til Nov ’25 and I’m hoping by then this thing will have shaken itself out and then can look at the options then.
This is such depressing news for my town.
It will probably be another year now, before we get FTTP rolled out in my street.
I just found/searched this page because a CityFibre crew were doing some work outside my house here in Henley. I couldn’t work out if they were contracting to Zzoomm (as they had some pink fibre truning onboard) or BT but given they were in the BT inspection holes – so maybe the latter…
They’ve been pretty good since I went with them in March 2021 – compared to BT (customer service was appalling) who I kicked out for Vodafone (customer service was good) its a no-brainer. I’m surprised they’ve still only got 1 in 3 takeup here but some people were moaning about them digging the road up, and their ugly pink vans and almost like they weren’t signing up out of spite so I wonder if they have a similar problem in other small towns (Fibre NIMBY-ism seems to be a thing!!) – I’m happy to refer if anyone wants them as it would be pain if they went under.
Zzoomm now say they don’t have server capacity for all new connections. 1gb now running at about 40meg at peak times. New servers on order….!