Broadband Networks Zzoomm and Freedom Fibre Ponder UK Merger UPDATE
Alternative broadband network builders Freedom Fibre and Zzoomm, both of which have been rolling out 10Gbps capable Fibre-to-the-Premises (FTTP) networks across different parts of the country, are reportedly holding “detailed discussions” about a possible future merger, which could create a network that covers over 500,000 premises.
At present Zzoomm’s network, which is home to over 30,000 customers (15%+ take-up) and covers 202,000 premises (RFS), is currently available across parts of around 29 market towns and small urban communities in Berkshire, Oxfordshire, Herefordshire, Yorkshire, Staffordshire, Wiltshire and Cheshire. The provider is primarily a vertically integrated operator, which acts as both the network operator and a retail ISP.
The operator originally planned to cover 1 million premises, yet the difficulties of raising fresh capital recently forced their roll-out to stop (here and here) and they’ve instead been focusing on growing take-up. But growth via mergers and acquisitions are something that Zzoomm’s CEO, Matthew Hare, is known to have been actively exploring (here).
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Meanwhile, Freedom Fibre, which is backed by InfraBridge (DigitalBridge) and Equitix, is a wholesale-only network that primarily covers 315,000 premises across parts of Cheshire, Greater Manchester and Shropshire in England. The operator previously aspired to cover 2 million premises and also holds the Government’s Project Gigabit contracts for 12,000 premises in rural parts of Shropshire (here), as well as 15,000 in Cheshire (here). But recently they also appeared to be focusing more on growing take-up (commercialisation) than network builds (here).
According to a new report on Sky News (credits to Nick for spotting), merger talks between Zzoomm and Freedom Fibre are said to have “progressed to a detailed stage,” although officially Zzoomm would only confirm that they were in negotiations with “numerous” parties and declined to comment specifically on Freedom Fibre (the latter has yet to comment).
Regular readers will know that a growing number of network operators, both big and small alike, have over the past couple of years moved to slow their network deployments (resulting in job losses) and switched their focus toward growing take-up to ensure some future stability. Such moves are a prudent course of action in the current climate of rising build costs and high interest rates, which makes it harder to raise fresh investment.
One other way to tackle these challenges is through consolidation, which is something that we’ve already seen happening quite a bit. But getting such deals and network integrations right can be a costly and expensive process. In this case there’s very little network overlap between Freedom Fibre and Zzoomm, except perhaps around Northwich where some overbuild does exist, yet otherwise a deal between the pair does look plausible.
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Such a merger might well value the combined company at around £500m, although there’s currently no certainty that the pair will actually be able to reach a final agreement. Time will tell. We should point out that merger agreements like this take a long time to go through the motions, so we might not learn the outcome for a few more months.
UPDATE 15th Nov 2024 @ 7am
One curious aspect of Sky’s coverage is that they name Freedom Fibre’s investor as Basalt (aka – Basalt Infrastructure Partners LLP), which had us scratching our heads because Basalt backs FullFibre Limited (Fibre Heroes) and not Freedom Fibre. So it’s possible Sky may have confused either their investors or the operators themselves. But we can’t blame Sky, there are now so many providers with “fibre” in the name that it can be brain melting.
FullFibre Ltd covers 380,000 UK premises and has zero overbuild with Zzoomm. Both operators also have a similar sort of approach to build and might actually be a better fit.
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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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Isn’t it obvious that Zzoomm will have to merge, to survive?
Surely the real question is – given their latest results and the levels of debt they are carrying – if potential merge partners sat back and watched, how long would it be until Zzoomm went pop, or scale back their operations to an extent that they could be picked up for less than any equitable value?
Find me a telco that doesn’t have debt ?
Just like people’s fibre and box broadband !
Is that your plan then?
Zen have only just signed up with Freedom Fibre as a wholesale customer, I wonder if they were aware of this at the time?
I’m surprised Freedom Fibre had nothing to say about this?
The biggest mistake from Zzoomm was not offering wholesale access.
In my area (Sandhurst) they were the first FTTP provider and had a 12 month jump before anyone else was available.
Since then Trooli, Swish, Virgin & Openreach have rolled out. But if Zzoomm did wholesale access then I doubt Trooli, Swish and possibly Virgin would have bothered building and just used Zzoomm’s network instead.
Seems madness to not be maximising the physical network and coverage.
like that would stop anyone. My area is double overbuilt and Openreach were the first followed by the two altnets. I doubt either of them are making much of a return given that every house has a shiny new OR fibre box next to the front door.
Wholesaling is a major undertaking for both sides and it is no surprise that even CityFibre is struggling to get the major ISPs on board – the others wouldn’t have a chance.
Given the corner-cutting nature of some altnets it wouldn’t surprise me to hear that their network architectures weren’t built with wholesaling in mind anyway.
I kind of agree, being able to pick a ISP would have been nice and maybe Zzoomm would have done better, but they are not doing too bad considering.
We will have to see what happens, I will carry on using them and see where it goes. That is all we can do. There is always a risk when going for a new company, done it once, which is why I was a bit worried about going to Zzoomm.
Laying networks for smaller providers is always going to be a risk, it is Okay for Openreach, they have the money and large company behind them, also they are pretty sure that most people will just change from FTTC to FTTP on their network.
To be honest, I never want to go back onto Openreach network.
Altnets overbuilding each other is just a consequence of the ridiculous Free-For-All that the regulators allowed and the so called goldrush that followed. Competition, yes absolutely but not the shambles we have ended up with.
The network architecture isn’t really the issue with wholesale, Ivor. Giving the ISP customers a smooth, automated journey via APIs and the necessary tools to support and bill their customers is the pain.
A wholesale network can be bodged from the regular one with PPPoE and commodity servers to handle BNG duties and RADIUS for preauthentication. Rides over a regular network. Doing it without PPP a fair bit more complicated.
Can’t see Zzoomm having to merge with all the money Ad47uk is paying them. 🙂
Oh you are so funny.
Not.
Must have taken you a few hours to think that one up.
Sick comeback, Ad.
With the cost of debt looking to rise and increasing competition these mergers are becoming more likely
Sadly yes,
RE Update:
I thought Freedom Fibre & Zzoomm were a strange fit. FF are closer to the likes of Netomnia & Trooli in the way they operate and I think they have have a lower cost build than Zzoomm
Ah, Sky News, that explains it.
I don’t understand how all these altnets were allowed to destroy so much capital from blue chip institutions and the directors aren’t being sued for negligence. The directors don’t even seem to resign. Their position must be untenable.
The sector is an embarrassment. Waffling on podcasts about being on the acquisition trail, what a load of baloney. Zzoomm are bust the moment equity grows a spine and stops bailing them out.
The supposed blue chip investors freely chose to invest their money in these companies. I wouldn’t shed any tears for them.
No different to cable companies spunking money up the wall in the 90s. The final outcome will most likely be the same as well.