UK-based alternative network providers are considering M&A activity and strategic partnerships as they seek to survive and secure growth in the highly competitive UK broadband market.
A survey of 100 senior decision makers at UK-based altnets, conducted by Censuswide for business connectivity provider Neos Networks, found that a vast majority of altnets (96 per cent of respondents) say they are considering M&A deals or strategic partnerships.
The survey highlighted the scale of the challenges facing UK altnets. 55 per cent reported that potential target customers are locked into pre-existing contracts, demonstrating the pressure newer firms are facing from legacy broadband providers. 47 per cent meanwhile said they were contending with a lack of awareness among customers, with many facing local competition from as many as four rival providers in regions where they operate.
48 per cent also reported difficulty accessing funding over the past year amid the UK’s ongoing economic uncertainty. This is being exacerbated by high interest rates, with 48 per cent of respondents naming this as they key factor behind their funding struggles. Firms also cited stringent lending criteria and regulatory constraints as notable challenges.
Meanwhile, many firms are being impacted by the closure of BT’s copper network – part of its transition to full fibre. As a result of this process, the majority of altnets are facing pressure to remove their equipment from BT exchanges, which are set to begin closing from January 2027, resulting in further costs.
98 per cent of altnets surveyed said that they expect to move beyond simply providing traditional residential broadband as they seek to broaden their services and secure growth. 46 per cent plan to launch smart home technology, 43 per cent plan to offer enterprise connectivity and 42 per cent are looking to move into security solutions.
Commenting on the survey, Neos Networks CEO Lee Myall said: “Altnets have played a pivotal role in reshaping the UK’s connectivity landscape, driving the expansion of full-fibre networks and challenging established incumbents. However, the industry now stands at a crucial crossroads. Heightened competition, financial pressures, and shifting regulatory frameworks mean that Altnets must evolve rapidly to secure their long-term future.”
“Our research highlights that Altnets are exploring a variety of strategies – from mergers and acquisitions to strategic partnerships and service diversification – to strengthen their market position and pave the way for sustainable growth.”
Find out more about the factors driving M&A in the telecoms industry in this in-depth analysis of dealmaking in UK service industries
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