Quickline Backer Allegedly in UK Broadband Merger Talks with KCOM in Hull

Canadian investment firm Northleaf Capital Partners, which backs alternative rural UK broadband ISP Quickline, has reportedly expressed an interest in acquiring KCOM, the incumbent broadband and phone provider for Hull, from Australian investment group Macquarie. But any deal is likely to see Northleaf pay less than the £627m Macquarie did to buy the incumbent.

Quickline is currently funded by c.£500m from Northleaf, as well as c.£300m of public subsidy from four Project Gigabit contracts (here, here and here), plus c.£225m in term loans and debt guarantees from the National Wealth Fund and a £25m term loan from NatWest. At the end of 2025 their full fibre broadband network covered 200,000 premises (excluding fixed wireless coverage, which also covers c.200,000 premises – not all gigabit-capable) – mostly across rural parts of Yorkshire and Lincolnshire. The operator currently aims to extend gigabit-capable broadband to a further 360,000 UK premises.

By comparison, Macquarie Infrastructure (MIRA / MEIF 6 Fibre) acquired KCOM in August 2019 for £627m (here) and promptly began a major network expansion, while also selling off some of the company’s assets. But the operator’s dominance of their core market in Hull, where Ofcom still deem them to hold Significant Market Power (SMP), has since been significantly eroded by rival networks like MS3, Quickline, Grain and Connexin (now part of CityFibre).

According to Ofcom, rival fibre builds mean that around 70-79% of premises in the Hull Area now have access to at least one alternative network to KCOM. Despite this, the regulator recently proposed to maintain many of its controls on the incumbent and even foster greater infrastructure sharing, which won’t have helped their prospects (here). KCOM currently has c.150,000 customers (we don’t know how many Quickline has).

The situation was underlined last month after KCOM revealed a huge c. £530m write down in the value of their assets (here). Suffice to say that this helps to explain why Macquarie hasn’t really made a secret of their desire to exit the business (here), ideally before their recent efforts to restructure KCOM’s current capital structure reaches its next set of funding problems in September 2027 (here).

A new report in The Times (paywall) now states that Northleaf Capital Partners is understood to have expressed its interest in buying KCOM, albeit almost certainly for a much smaller figure than Macquarie originally paid. The cost of upgrading KCOM’s remaining customers from copper to full fibre is another issue, although they’ve been making progress on that (legacy products are due to be retired in the next 18+ months or so).

The issue of value and Ofcom regulation, given KCOM’s predicament, could make reaching a deal quite difficult (Macquarie tried to sell the operator in 2024 and failed). On the other hand, despite operating in the same parts of England, both Quickline and KCOM only have a relatively small amount of overbuild via their respective full fibre broadband networks (KCOM is mostly focused on Hull and its surrounding areas, while Quickline tends to stretch much further beyond).

At present, it remains unclear whether Northleaf’s express of interest can be turned into a formal agreement, although any deal could potentially have an impact (e.g. delay) upon Ofcom’s current strategic review of Hull’s telecoms market (here). Alternative options might involve further debt restructuring (i.e. lenders taking more control of the company) or a break-up / asset sale of the business.