UK alternative network providers consider mergers and acquisitions and diversification to cope with competitive pressures.

In the rapidly transforming landscape of the UK broadband industry, recent research conducted by Neos Networks has shed light on a noteworthy business trend observed among alternative network providers, better known as Altnets. The study reveals that a staggering 96% of UK Altnets are contemplating engaging in mergers and acquisitions (M&A) as a fundamental part of their strategic approach to prosper and grow amidst intensifying market competition.

The comprehensive survey conducted by Censuswide delved into the challenges faced by Altnets. A significant 55% of respondents highlighted a key obstacle: their potential clientele being locked into existing contractual agreements. This underscores the competitive barriers they encounter from long-established service providers. Furthermore, 47% of respondents lamented a lack of public awareness regarding their products and services, exacerbated by robust regional competition involving as many as four other providers.

Financial hurdles loom large for Altnets, with nearly half of the surveyed businesses grappling with difficulties in securing funding over the past year, primarily due to prohibitively high interest rates. Moreover, regulatory hurdles, exemplified by BT’s impending shift from copper to full-fibre networks, have presented logistical and financial hurdles. Insights derived from the study suggest that the process of dismantling equipment from BT’s exchanges, slated to commence closures in January 2027, could potentially incur an average cost of £1.4 million per provider.

Embracing an ethos of foresight is imperative for Altnets seeking to fortify their market position. A resounding 98% of respondents expressed intentions to diversify their service portfolios beyond conventional broadband offerings. This strategic vision encompasses an array of initiatives including the introduction of smart home technologies (46%), the provision of enterprise-grade connectivity solutions (43%), the rollout of security packages (42%), and the integration of multi-service solutions such as TV and entertainment packages (35%).

Central to the priorities of Altnets is the unwavering commitment to customer satisfaction, with 55% of respondents unequivocally identifying it as their focal point over the forthcoming years. Leveraging cutting-edge technologies like Software-Defined Networking and Network Function Virtualisation (53%), Altnets seek to carve out a distinctive niche in an intensely competitive marketplace. Noteworthy advancements such as 5G Fixed Wireless Access (39%) and AI/ML-enabled BSS automation are gaining significant traction within the sector.

Reflecting on the industry landscape, CEO of Neos Networks, Lee Myall, emphasized the pivotal role played by Altnets in reshaping the connectivity paradigm in the UK, catalyzing the proliferation of full-fibre networks and challenging the entrenched incumbents. As the sector stands at a critical juncture, strategic foresight and adaptability emerge as indispensable attributes for Altnets navigating the evolving terrain of the UK broadband market.