Spring Fibre’s Principal Investor Steps Away from UK Full Fibre Build UPDATE
Alternative broadband operator Spring Fibre, which has been in the early stages of rolling out a new 10Gbps capable wholesale full fibre (FTTP) broadband ISP network since 2021 – starting in Lincolnshire (here), are on the hunt for new funding after their principal investor said they “will not continue to fund its network construction plan“.
The operator, which was initially backed by Kingsley Capital Partners and telecoms specialist Graphite Strategy, is known to have originally secured an investment of “up to” £155m from R&M’s (River and Mercantile) infrastructure business to support their aspiration of covering 1 million premises in England (here).
However, despite the fact that Spring Fibre first cropped up several years ago, we still know very little today about their current progress, ISP availability or future roll-out plans (not for lack of asking) – except that they originally appear to have started building in Lincoln city, as well as the small towns of Mablethorpe and Louth, earlier in 2023 (here). But we’ve yet to see any retail broadband packages going live.
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The company’s most recently published accounts, which run to 31st December 2023, have at least revealed that their focus on build has delivered a net deficit on their balance sheet of £13.69m (vs £2.734m in 2022), which is to be expected from an altnet that is in the early phase of their roll-out. But more worrying is the loss, at such a critical stage, of support from their principal investor.
Statement from Spring Fibre’s Accounts
At the time of approving the financial statements, the directors have received a notification from the principal investor in the company that they will not continue to fund its network construction plan and meet its continued operational expenditure.
According to the update, Spring Fibre’s Directors are now hunting for a “new investor” in order “to be able to finish the construction phase and fund its short term debt as it falls due“. The operator claims to be confident in finding such an investor, although this is certainly not the most ideal timing to go on such a hunt.
All of this is occurring during a period where many fibre builders (altnets) are under pressure from issues related to rising build costs, high interest rates (i.e. making it harder to secure fresh investment / pay debts) and the difficulties of growing consumer take-up in such a competitive market. We have asked Spring Fibre to comment and hope to report back shortly.
UPDATE 18th Sept 2024
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We’ve had a response from Spring Fibre. A spokesperson for the altnet told ISPreview: “Spring Fibre, the sustainably focussed alt-net, are in a strong position as they continue to build network in the East and Northeast of England, with supportive investors, having gone live with Customers in recent months.”
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.
£20-25m invested so far (well 9 months ago) for a network with a book value of £9m (and probably worth £0) and no customers. Makes sense to cut their losses!
100% but now what? Let the company go bust and sold out of liquidation for literally 2 million or so.. that sucks for them.
@N: Things don’t look good:
CY22 turnover = £0
CY23 turnover = Probably £0 (no P&L breakdown was submitted)
CY24 turnover = Probably still £0 (there’s no obvious sales activity)
It doesn’t look like Spring have generated a penny of revenue from selling anything to anyone. Any and all cash this company has ever had, has come from their investor: £27m = £3m equity and £24m debt (to CY23)
That investor has now withdrawn *all* support. Not just the network build (capex), they aren’t even going to support keeping the lights on (opex) by the sounds of it
Short of finding a new investor, Spring have as much runway as their remaining cash allows
How much runways is that? Not very much…probably…
End of CY23 Spring had less than £1m cash (£2m less £1m short-term creditors)
Spring ran an £11m P&L loss in CY23 (including £2m of debt interest, £23m at 8.5% = £2m). Even with big cuts I just can’t see how the under £1m cash at the end of CY23 would have stretched to today.
There must have been some kind of cash injection in CY24. Assuming there has been, how much cash they have left is unknown.
I can’t see them finding a new investor.
They won’t be able to generate enough turnover to support the business. They’d need something like 5k customers at £30pm just to cover the £2m interest cost each year. And that’s before any existing costs they need to support. And before the cost to build even a basic retail ISP infrastructure to gain and retain 5k customers! It’s not going to happen.
The only out would then be a sale…
The £9m of book value assets suggests a footprint of maybe 18k premises (£500 CPPP).
Those 20k premises have cost the investors £27m so far (well to CY23), that’s £1500 CPPP!
I can’t see the bigger altnets bothering with the effort of taking on, and integrating, such a small footprint. They could build 18k quicker than it would take to draft the Sale Agreement without the hassle and at a lower CPPP (lower than £500, let alone £1500).
The smaller altnets, where 18k might have more of an impact, may struggle to finance and resource (internally) an acquisition/integration.
I assume the “I’m out” from investors is a case of trying to force a trade sale to recover as much cash as they can. I think there’s a good chance they run out of cash before then though.
Wow! Didn’t spot there’s no retail packages yet.. so they’ve either got nothing to sell, or actively want to sink the ship. Realistically they’ll be really lucky to get £175-200 per prem passed.
20k prems passed is probably a made up figure. If I was the investor I’d be asking for all the test results. Prems passed is easier to fiddle than RFS.
Spring are 100% overbuilt by UPP (now Virgin) and in Lincoln by Cityfibre too.