City-focused ISP Hyperoptic, which since 2011 has built an alternative full fibre (FTTP/B) network to reach “more than” 1.73 million homes in parts of 64 UK towns and cities, has informed its staff that 2025 will see a “reduced volume of work” and thus a potential reduction in their infrastructure teams of nearly 130 jobs (out of nearly 280 potentially impacted roles).
The operator, which at the last update in July 2024 said they were home to a customer base of 340,000 (with a target of 500,000 for some point in the future), was previously known to be aiming to cover 2 million premises with their gigabit broadband network by the end of 2024. But we remain unsure of how close they are to that figure.
Hyperoptic previously suffered a modest sized round of redundancies in mid-2023 (here), but since then they will have also been coming under pressure from the same challenges as other operators (i.e. high interest rates, rising build costs and strong competition from rivals in the same space). In addition, we also saw a smaller number of job cuts in the latter half of 2024, but this was only a little above ‘business as usual’ levels.
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The company’s most recent financial results (here) confirmed that high interest rates had helped to fuel a total loss for the year of £142m (e.g. the interest due on their loans reached £66.85m, up from £27.66m in 2022). But the operator had still been continuing to expand their network, which is very capital intensive. Revenues also grew by 19% to £93.4m and their customer base jumped 17%.
However, much as we remarked in October 2024, Hyperoptic really needed a big surge of new investment, or it would have to increasingly switch away from new build and move more toward greater commercialisation like other altnets (i.e. growing their customer base).
Information leaked to ISPreview reveals that, toward the end of last week, Hyperoptic’s staff were notified that the operator was expecting a “reduced volume of work … in some areas” (build) during 2025. The operator said this meant they’d “need fewer managers overall” and that it would result in “appropriate changes to the UK Infrastructure teams” supporting their roll-out.
The announcement questioned whether Hyperoptic itself was “using our money wisely” by maintaining current team sizes and then admitted that, after “very careful thought“, some people would be losing their jobs. But it wasn’t all bad news, as up to 30 new roles will also be created, which might be suitable for some of those whose role is now at risk.
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The proposed changes indicate a potential reduction of less than 130 roles from their UK-based Infrastructure team (there are almost 280 people whose roles are impacted), which mostly impacts manager, support and some engineering roles. The consultation process for this is only just getting underway, and thus a final redundancy figure isn’t yet known.
Dana Tobak, Founder & CEO of Hyperoptic, told ISPreview:
“As is often the case for a mature business such as ours, we regularly review our processes and how our teams are structured, to ensure we remain on track to deliver against our business plan. Following our most recent review, we identified further opportunities to improve the way in which we support our partners and customers. These improvements require organisational changes (that will include redundancies) which we are in the process of implementing. Naturally, this has been a tough decision to make and we are supporting impacted people throughout the process.
With our target of 2m homes passed well within our sights, we have entered the next phase of our growth strategy: to continue to deliver a five-star customer experience to many more customers. To support this ambition, we are continuing to work with and grow our relationships with new build developers, freeholders and management companies to bring our services to more homes and businesses.”
The decision to cut jobs as they near their current build completion is understandable. At the same time, the provider could also be said to have a stronger and more established economic base than many of today’s significantly younger altnets, which affords them some stability.
On the other hand, it wasn’t so many years ago that Hyperoptic were promoting a somewhat overly ambitious target of reaching 2 million UK homes by the end of 2021 and 5 million by 2024. The provider may well be continuing some build going forward, albeit at a reduced pace and scope, although it’s currently unclear how far beyond that 2m figure they’ll go.
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I gotta think what the next step for Hyperoptic is. We’ve had it in for nearly 8 years, where we were in an FTTP non spot with BT/Virgin etc. Our MDU had the whole Huawei switch + Cat5e solution in. I did wonder at the time if this would ham string them down the road.
Hyperoptic will have to do something really revolutionary to have a USP against the incumbents. We had notice today BT are firing the building. I don’t even think that 10gig would be enough of a differentiator. Perhaps a 25gig service to set apart, otherwise, apart from the symmetric service, their only way to differentiate would be by undercutting Openreach based packages in price.
Be interesting.
Yes, and it’s offering services at a price low enough to persuade Openreach or one of the other large players not to build.
Service providers don’t want loads of wholesale agreements if it introduces additional overhead.
I think that’s basically it – their USP is, effectively, “Being an altnet”. But so, too, is the USP of the other altnets; most of them offer similarly high speed, good performance, etc.
It’s likely that churn will reduce with FTTP when price/performance is good. So the race in the ISP space is to ‘get’ the customers moving from ADSL/FTTC (and maybe also from Virgin Media if they’re in a contented area), and then look after them sufficiently enough that they don’t want to move again.
Am I right, though? That’s the question!
The route is probably to get their own fibre into almost all places they have EAD backhaul, you should in theory be able to have that pay for itself in 95% of cases. They can then offer probably upto 5G over that cat5e infra and/or price 10G high enough that it justifies running fibre internally, or maybe they get “stuck” servicing the bottom 50% of the market in a given MDU offering just great prices and service.
From a strategic perspective just owning that backhaul gets them into a much much better position as they could even sell to someone who just takes the view they’ll rip and replace cat5e with PON. At the end of the day we’re talking about ~50M of in-building cabling where they’ve already got customers and wayleaves so as easy as you’re ever going to get. Should be <£100/prem passed to replace.
Another thing to consider is that those builds in particular were very capital efficient – around £150-200 per premise passed – so they may have already paid that cat5e/switch/EAD install back.
Topical – we’re waiting an install date for our Waterloo office at the moment. Been stuck on PlusNet VDSL since it was first available despite ALL the council flats in the area being Hyperoptic cabled a couple of years ago.
Been itching to get a symmetric connection for backups for over a year and coincidentally our offsite gets a Toob 1Gb fibre connection tomorrow.
One of the barriers to getting them in was the wayleave contract they sent to the landlord being to onerous for them to agree to, or they’d have been able to partner with them and offer it to all 10 units. As it is, there’s only 1 other tenant getting it installed this round, which is a shame as we’ll all be in the same BT fibre desert.
Perhaps they can review their default wayleave terms and seek out more small business unit complexes stuck with no date for BT’s 2nd class asymmetic FTTP.
I’ve seen thier default wayleave and it’s pretty reasonable, sounds like you’ve got a difficult landlord.
It would be ideal if the government could just impose a default standardized wayleave on landlords because it’s a nightmare for everyone involved. Trust me hyperoptic have no incentive to write a difficult wayleave.
Ofcom have provided Standard Terms for a while now: https://www.ofcom.org.uk/siteassets/resources/documents/consultations/category-1-10-weeks/99140-electronics-communications-code/associated-documents/ecc-standard-terms.pdf?v=384632
The issue with Hyperoptic as has been touched upon here, is that the honeymoon phase is over, competition is literally knocking at many of the doors of their customers. They no longer really have a USP but maybe even have a disadvantage as they heavily rely on 1G EAD circuits from Openreach which means multi-gig services are not possible without even more investment.
Hyperoptic’s pricing for out of contract customers is not favourable unless customers haggle (think Virgin Media style antics). Many customers will simply just move to another provider (especially CityFibre based outfits) who are offering similar (or higher) speeds for often less money.
Hyperoptic may have reached a point of saturation of being first gigabit provider available to a new site thus they have to lower prices/run deals to gain customers. But this increases the ROI on the new infrastructure they have just built which changes the business case. Not surprised to see them reducing expenditure now.
I am however surprised that Hyperoptic is still posting a loss (excluding interest on their debt) considering they were a very early pioneer in gigabit connectivity. Given the cost of backhaul for a site requiring a fairly decent number of subscribers to cover the base cost (1G = £188/month + VAT) they must have quite a few sites which are loss making if there is low take up. The question is whether they will simply stop offering service to unprofitable sites.
Less than a third of their build relies on 1G EADs. A problem though, and astonishingly they have PIA fibre passing some buildings that’re on 1G EADs, I guess they were too focused on build to do a upgrade program
Well,
1) were talking about a UK cost effective infrastructure (does tellecoms fall under cobra..) a reliable consistens infra is needed, far all, sadly this seems to be forgotton and not regulated…
2) Ha USP for a national infrastructure need? Thats just spin and bs due to lack of clear national infrastucture ‘regulation’.
3) Implementation of such obviously (to some at least) has a resource (itc ‘person’power profile) that will wane over time as systems fall into operation and maintenance phases, and unless your going to move all the cabling/’build’ resources into ‘overhead/operating/maintaing’ roles then they’ll become redundant, obviality! Unless of course for some very bad planing or regulation delinquencies there’s profit crippling re-work*?
Mind given current level of shoddiness such waste/negligence is just charged to the consumer victims of such organisation/practices. Why should consumers, or taxpayers, have to pay for delinquencies in CxO , ‘Regulation’ or shareholder / investment responsibilities? I can’t think of one other than the fat getting fatter.