G.Network Sell London UK Full Fibre Broadband Network to FitzWalter Capital
Roughly nine months have passed since we reported that alternative UK network operator and ISP G.Network, which has deployed a gigabit speed full fibre (FTTP) broadband network across parts of London, had put up the for sale sign (here). But this afternoon news emerged that the provider had been acquired by FitzWalter Capital for an undisclosed sum.
In case anybody has forgotten, G.Network originally held an aspiration to expand their fibre network to cover 1.3 million premises London by the end of 2026. But like many other altnets they’ve since been impacted by an increasingly competitive environment and rising costs (high build costs, high interest rates etc.). This has already resulted in job cuts and a greater focus on commercialisation, instead of new fibre build (here).
Despite the challenges, the operator has continued to receive funding from long term equity investor Universities Superannuation Scheme (USS), including £85m in June 2024 (here) and “up to an additional” £150m (here) in July 2023. Future such funding rounds seemed likely, unless a deal could be done to find a new owner or consolidate with a rival.
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The company’s most recent accounts did however report an 85% increase in turnover to £10.2m in FY2024 and a gross profit of £7.3m (up 62%), with total assets of £453m (up from £394m). But they also suffered an operating loss for the year of £52.8m (down from a loss of £67.2m in the prior year) and are estimated to be carrying a net debt of over £300m (Enders Analysis).
Suffice to say that we weren’t too surprised when it was reported last March (here) that G.Network had instructed bankers at Jefferies and Nomura to engage with potential buyers for the business, although we’d heard similar stories before that hadn’t amounted to anything (here). One key challenge is the fact that their network has already been partly overbuilt by Hyperoptic and CommunityFibre, which are bigger players in London’s altnet space, alongside the established giants of Virgin Media (nexfibre) and Openreach (BT).
G.Network sold
According to some of our industry sources and a report on the FT (paywall), the operator quietly succeeded in finding a buyer over the normally quiet festive period. ISPreview understands that several investors and network operators had expressed an interest in bidding for the business, although in the end a financial buyer in the shape of distressed debt specialist FitzWalter Capital tabled the most attractive offer.
The newspaper reports that G.Network had so far only been able to grow their customer base to just 25,000 (up from 8,664 in March 2022) and that the company’s creditors, including NatWest, Investec and Santander, are bracing to suffer a writedown on their investments. G.Network declined to comment on today’s development when asked by ISPreview.
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James Ratzer, Analyst at New Street Research, said:
“Given the company’s losses, it is hard to see an obvious standalone business case. We presume the buyer is a short-term holder and would be keen to sell to another provider as soon as possible.”
Residential customers of G.Network currently pay from £25 per month for a 300Mbps (100Mbps upload) service on a 24-month term (plus a £29 one-off connection charge), which rises to £29 for their 900Mbps (300Mbps upload) plan with free connection or £36 if you want symmetric speeds on that tier. Shorter 12 and 1-month contract options are also available at extra cost.
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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There are patches of Islington that got a lot of expensive civils works completed over three years ago – ducting in the streets, chambers, and toby boxes outside every property. The service never went live, the sales team would only repeat the same answer that the website gave (fill in a form to say you were interested) and seemingly had no way to address the issue that the company had spent a fortune and not completed the final step to actually start generating revenue. The area is now pretty much fully covered with Openreach and overbuilt by a Hyperoptic/Community Fibre split that was done using PIA. I am not surprised G.Network lost money, I would be surprised if they even realise they own these ducts.
Absolutely.
There are areas in W2 that are the same.
The civils are usually the expensive bit….so it is a bit worrying that it was never fibred never mind marketed!
What is the chat/goss on TalkTalk future..
Buy to sell ? Well they would either need to have brought dirt cheap and then do something quickly to raise the sell price. None of the alt nets are made of gold so I can’t see how the price will go up quickly. I think the areas they are in make a good business model if people would just grow some balls and move away from Open reach !
You are speaking as if those on Openreach-based services are being held against their will.
Some people are simply happy with the level of service they receive from their OR-based provider. Others may not want additional equipment installed in their home for access to a network with a smaller number of providers to choose from.
I’ve never understood the business model for small altnets in urban areas. They don’t have the scale to attract big name ISPs and they’re virtually guaranteed to be overbuilt.
The first to go down this route, certainly wont be the last. I suspect before the end of 2026, some rather large players will be handled the same way.
Unfortunately an abject failure under Kevin Murphy’s leadership , bringing incumbent mindset to a start up is the wrong move . I wonder how the new owners will make money out of this deal .
It was already a basket case when Kevin joined. A decade ago, the firm’s “bespoke” ducting in Central London was a marvel of engineering but a disaster in accounting. In a market where competitors can use PIA to rent Openreach ducts for a pittance, G.Network’s insisted on building a super-expensive duct network was madness. It was a redundant strategy that provided no competitive edge, only a mountain of debt.
Its no surprise that G.Network were the first to fall: they were simultaneously among the most expensive builders and the worst marketeers.
G.Network’s build cost over £1,000 per home passed, compared to Openreach and Netomnia averaging £250 per home passed.
With only 12,000 customers out of 250,000 homes passed (5%), G.Network are way behind Openreach with its 38% take-up and Alt-nets general target of 20–40% to reach break-even.
£300m debt against a market value potentially as low as £50m, raises serious questions about due diligence. Who was managing these finances, and who advised the investors?
Anyone have any idea who FitzWalter Capital are? I suspect they’re an investor with fingers in other alt net pies, as the only value G.Network have is to provide a London network to move away from PIA and a small handful of subscribers.
OK. So Fitzwalter Capital are a distressed debt specialist meaning they’ll liquidate G.Network by stripping assets, Gordon Gekko style.
That will likely mean customers lose service where there’s no overbuild, network equipment sold and the fibre in ground then sold as a debt free asset to someone and any debt remaining written off.
An ugly death, but unfortunately the first of likely many to come.
Mr Jenson’s prophecy of tears ahead for altnets is looking pretty accurate two years on.
Investors have been drip drip dripping investment with little to show and now it looks like many have had enough.
I wonder who will be the first altnet CEO departure this year.
Had it not been for the Privatisation of BT, who’s plans for laying FTTP were well advanced before privatisation. And shelved, directly afterwards to focus on generating profits for private shareholders. The UK could have had, a far more advanced FTTP network than it does at present. Currently we face the, ludicrous position of, multiple FTTP networks being built at massive expense in towns & cities. With slim possibilities of return for shareholders. There are plenty of examples worldwide of countries building single FTTP Open networks, that are far more advanced, wide reaching & comprehensive, than our own tangled, overbuilt mess. There is absolutely no reason we need multiple FTTP networks anywhere in the UK…