Major UK Banks Scale Back Support for Alternative Broadband Networks
Two of the largest backers of the UK’s alternative broadband networks, NatWest and Lloyds, have now scaled back new lending to the heavily indebted sector. The move follows an earlier report in August 2025 (here), which revealed that a number of banks had set aside funding to cover loans issued to altnets (now deemed unlikely to be repaid in full).
Over the past few years’ we’ve regularly reported on the growing challenges being faced by network builders. Most of that has been fuelled by rising build costs, fierce competition from rivals (e.g. overbuild and the challenges of growing take-up) and the difficulties of securing fresh investment during a period of stubbornly high interest rates (e.g. tackling rising debt repayments).
Many altnets responded to this by switching their strategy from rapid network expansion to focus on commercialisation of what they’ve already built (i.e. growing take-up), which is a sensible approach. But this could also be seen as buying time for natural market consolidation to ramp-up, although it’s so far been moving more slowly than hoped; likely tempered by some unrealistic asset valuations of built infrastructure.
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According to the FT (paywall), NatWest and Lloyds have now taken another step by scaling back new lending to the sector. The move, which doesn’t impact existing loans, means that any altnets seeking fresh loans from these banks will need to meet a much higher bar. In the case of Lloyds, they have not implemented a formal or informal policy to halt lending, but are judging prospective clients much more closely on their respective merits.
A spokesperson for Lloyds said:
“Lloyds continually looks for opportunities to help businesses across the UK, in all different sectors and sizes, giving them the funding and support they need to grow.”
A spokesperson for NatWest said:
“We take a considered approach to any lending — whether new or existing customers — and evaluate all decisions on a case-by-case basis.”
None of this will come as a surprise to regular readers of this site and indeed other investors have been taking a more cautious approach for the past couple of years, albeit with some deals still being done. For example, Netomnia completed a £300m junior debt raise in September 2025 (here) and Grain (Grain Connect) confirmed a £225m funding boost – mostly debt and some equity – in July 2025 (here). Not to mention the recent funding deals for GoFibre (here), Wessex Internet (here) and Highland Broadband (here).
As for those in a more difficult position, possible solutions other than consolidation (or complementary to that) are likely to involve a combination of things, such as reaching agreements with other shareholders to inject extra cash, swapping debt for equity or extending credit facilities etc. However, it’s important to reflect that, despite the challenges, all of this investment has helped to produce a much wider variety of competition and thus network choice and coverage for consumers.
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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Somewhat mealy mouthed by Natwest & Lloyds methinks. Will it take a large scale bankruptcy to concentrate minds & force the pace of consolidation?
I am not sure that “consolidation” is affordable in many cases. The clearest route to sustainable services would seem to be acquisition from administration.
Acquisition from administration is still a form of consolidation if it results in two or more networks being combined.
@Mark Jackson:
In terms of outcome, it might be deemed consolidation, but in practical terms, it would be quite different.
Consolidation is usually deemed to mean proactive acquisition. Unfortunately, there would seem to be many obstacles – financial, technical, strategic etc, etc – that would render many such acquisitions in the broadband sector nonviable. As a consequence, investors are increasingly likely (and some now seem to formally recogbising this) to make losses on their investments. This will likely impact future decisions about investment in the sector and the valuations of businesses that remain.
Further, from the tactical perspective, acquisition of assets out of administration can be handled as an expansion of existing capabilities rather than a merger of two different operations, thus avoiding having to address issues such as terms of employment, alien strategies, etc so long as the acquirer is selective in what they pick up out of the resulting firesales.
P.S.
I would add that I do not think everything that has been built to date would now necessarily find a new owner if the current business owner went bust. There is a cost of acquisition of every asset and I would suspect that there will be cases where that cost would now make any such acquisition “speculative” and “high risk”.
This form of “consolidation” could prove to be brutal for customers and investors.
It is worth pointing out that it is not only the less efficient AltNets that are being impacted by the changes in bank lending policies. Some major players are also at risk.
Maybe it should have been thought through more carefully in the first place . The provision of multiples of ( unnecessaryin the most part ) infrastructure in urban areas were never going to recoup costs and profits for those who did not have a sound buisness plan in the first place .They should have checked about the customer base they intended to gain before installing the multiples of infrastructure. You can’t blame the banks for pulling out , why would they throw good money away , it will be the pension funds that take the hit next time . I wonder who the government has next in line
If pension funds are equity investors, they will take the hit first. Banks are usually senior creditors and as such will be the last to lose money.
Tell me you don’t know how the open market works, without telling me you don’t know how the open market works.
The most recent prior example of large scale local infrastructure build was the cable companies. Each was offered a regional monopoly franchise. They all went bust, leaving NTL/Virgin to buy them up in a fire sale.
Which model do you propose would have worked better? Remember this rollout has taken place against a backdrop where the cost per premises to install service is 50-100 times what people are willing to pay for a monthly rental and where that monthly rental barely covers the interest on the money borrowed to do that network build, let alone repay any debt or make a profit.
I strongly agree with your first point.
This was a major failure of Ofcom to ensure that only resilient candidates could enter the market. As a result of Ofcom’s failings, the market is being impacted by zombie businesses that will not last the course, leading to a fragile market in areas of the UK.