{"id":32988,"date":"2022-11-23T08:39:48","date_gmt":"2022-11-23T08:39:48","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=32988"},"modified":"2022-11-24T15:41:09","modified_gmt":"2022-11-24T15:41:09","slug":"focus-on-cost-savings-impacts-openreachs-uk-full-fibre-build","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/11\/focus-on-cost-savings-impacts-openreachs-uk-full-fibre-build.html","title":{"rendered":"Focus on Cost Savings Impacts Openreach’s UK Full Fibre Build UPDATE2"},"content":{"rendered":"

Openreach<\/a> (BT<\/a>) has reportedly informed its suppliers that their need to curb costs and get more “bang for its buck<\/em>” will impact the UK rollout of their gigabit-capable Fibre-to-the-Premises (FTTP<\/a>) broadband ISP network, which will “include an element of cancellation or suspension<\/em>” of some work and have a “financial impact<\/em>“.<\/p>\n

The rollout, which is expected to cost “up to<\/em>” \u00a315bn<\/strong> and recently reached 9 million UK premises<\/strong> (inc. 2.8m in the hardest to reach rural areas), is currently running at a build rate of c. 62,000 premises per week<\/strong> and this is predicted to peak at c.75,000 premises at some point in the near future (i.e. up to 4 million premises per year, which compares with the 1.9 million added in 2020\/21).<\/p>\n

NOTE:<\/strong> Openreach<\/a>\u2019s goal is to reach 25 million premises (80%+ of the UK) by December 2026 and 6.2 million of those being targeted are in rural and semi-rural areas (here<\/a>).<\/div>\n

However, the CEO of BT<\/a> Group, Philip Jansen<\/strong>, recently warned (here<\/a>) that high inflation and increased energy prices were “pushing us hard<\/em>” (e.g. their energy bill went up by \u00a3200m this year) and as a result the group needed to take additional action on their costs to “maintain the cash flow needed to support our network investments<\/em>.” As a result, they increased their cost savings target from \u00a32.5bn to \u00a33.0bn by the end of FY25.<\/p>\n

According to the FT<\/a> (paywall), Openreach<\/a> has now informed suppliers that it will instead build its full fibre network “narrower and deeper<\/em>” and “tighten the timing of investment<\/em>” to a just-in-time approach (i.e. not committing capital to projects further than 6 months out). The focus will thus switch to completing areas that are already partially finished.<\/p>\n

The operator has a further 6m homes (on top of the completed 9m) that are currently “partially built<\/em>” and the changes will thus mainly be reflected in a suspension of work on engineering surveys and estimates for future work beyond the first 15 million premises. Despite this, Openreach’s CEO, Clive Selley<\/strong>, is adamant that this will not affect their target of reaching 25 million premises by the end of 2026. Time will tell.<\/p>\n

We suspect this means there will also be fewer rollout announcements in the short-term, at least until they’ve made more progress on completing the first 15 million premises. The move could conceivably benefit some of Openreach’s rivals in the alternative network (AltNet) space, albeit somewhat temporarily.<\/p>\n

But AltNets also have their own cost challenges to consider, particularly with investors starting to test whether their funding is delivering the necessary take-up in early build areas. Operators that struggle to deliver on this may face a tightening of the purse strings, which could slow their builds in order to focus on increasing adoption, and if that fails the alternative is often consolidation. We expect a fair bit of the latter.<\/p>\n

UPDATE 11:09am<\/strong><\/p>\n

Openreach has issued a general comment on the FT piece, which doesn’t add much, but does highlight that their pace of build is continuing to increase. The above change is all about finding a more cost-efficient way to deliver on their target, without compromising on pace and quality.<\/p>\n

An Openreach spokesperson said:<\/strong><\/p>\n

“We expect to build ultrafast full fibre broadband to more homes and businesses next year, not fewer, so we\u2019re speeding up not slowing down.<\/p>\n

As our recent results show, we\u2019re investing \u00a3200m more than we expected to this year on the build, and orders for Full Fibre services are at record levels. In fact, nine million homes and businesses can already order our Full Fibre service from a large range of service providers, so it makes sense for us to put more resources into upgrading customers and fulfilling orders as quickly and smoothly as possible. We\u2019ve also partially built the new network to a further six million premises, so we\u2019re focussed on completing that work.”<\/p><\/blockquote>\n

By the sounds of things, Openreach will primarily be focusing on their build in existing exchange areas until around early Spring 2023, but after that they’ll be back to targeting new exchange areas again.<\/p>\n

UPDATE 24th Nov 2022<\/strong><\/p>\n

Clive Selley has written a blog post<\/a> to help further underline the fact that they still expect to hit their build targets. We’ll paste an extract from that below.<\/p>\n

Clive Selley said:<\/strong><\/p>\n

“It\u2019s fair to say we\u2019ve got a bit ahead of ourselves on what we call \u201cexchange enablement\u201d – putting new equipment into our exchange buildings before we build out to homes and businesses.<\/p>\n

That means we\u2019ve \u2018enabled\u2019 or partially built the new network to around half of the homes in the UK already.<\/p>\n

As a result, we\u2019re going to pause starting some new jobs – like surveying work in other locations – for the rest of this year and we\u2019re going to focus on completing work that\u2019s already started.<\/p>\n

It\u2019s easy to misinterpret all this, but it\u2019s about having financial discipline and getting a better bang for our buck … So don\u2019t expect us to slow down \u2013 we\u2019re building and connecting like fury.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Openreach (BT) has reportedly informed its suppliers that their need to curb costs and get more “bang for its buck” will impact the UK rollout of their gigabit-capable Fibre-to-the-Premises (FTTP) broadband ISP network, which will “include an element of cancellation or suspension” of some work and have a “financial impact“.<\/p>\n","protected":false},"author":1,"featured_media":32990,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[474,56,69],"class_list":["post-32988","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-bt","tag-fttp","tag-bt-openreach"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nFocus on Cost Savings Impacts Openreach's UK Full Fibre Build UPDATE2 - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Openreach (BT) has reportedly informed its suppliers that their need to curb costs and get more "bang for its buck" will impact the UK rollout of their\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2022\/11\/focus-on-cost-savings-impacts-openreachs-uk-full-fibre-build.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Focus on Cost Savings Impacts Openreach's UK Full Fibre Build UPDATE2 - 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