As first rumored on these pages in April 2024 (here), two of the largest alternative UK network operators on the market – Netomnia (YouFibre) and Brsk – both of which have a significant amount of Fibre-to-the-Premises (FTTP) have deployed broadband. ISP infrastructure for UK homes and businesses has today formally agreed to a merger.
First, some context. Brsk is currently the smallest of the pair and has been fueled by an investment of minimal so far £259 million (usually via Advencap and the Ares Management Corp), allowing them to serve 552,000 premises (536,000 Ready for Service) in England. The operator sells packages to consumers under the same brand (they have 41,200 customers) and until now wanted to 1 million houses by 2026.
REMARK: Both grid operators share an affiliated investor in the form of Advencap.
On the other hand, we have Netomnia, which is by far the larger of the two operators, having already covered almost 1 million properties and £795.5 million of investments in just three years (via Advencap, DigitalBridge and Soho Square). The operator, which sells its packages to consumers through sister ISP YouFibre (they had 80,000 customers as of March 2024), also had a cautious ambition to reach up to 2 million locations by the end of 2025 (1.5 million already planned).
However, the pair have been linked to speculation of a possible consolidation for some time, which is partly due to the fact that they share one of the same investors. Furthermore, both operators have managed to out-build each other and appear to share a similar capital-efficient construction approach, utilizing as much of Openreach’s existing cable ducts and poles (PIA) as possible to lay new fiber (Netomnia spends an average of £250 per passed building).
The newly merged group will therefore have a combined network footprint of 1.5 million properties (RFS) and a customer base of 140,000 immediately post-merger, with the aim of reaching 3 million properties (coverage) by the end of 2025.
Jeremy Chelot, CEO of Netomnia, said:
“By combining our networking expertise and resources, we are creating a powerhouse that can deliver an unparalleled Internet experience to our customers, driving innovation and further consolidation among altnets. The additional capital from our investors and the support of our lenders is a strong endorsement of our vision and ability to perform at the highest levels.”
Giorgio Iovino, CEO of Brsk, said:
“The merger is a testament to our shared entrepreneurial spirit and experienced teams that can deliver even more. Together we are ready to deliver a fiber optic network that is not only fast and reliable, but also future-proof, so that our customers can benefit from it today and tomorrow. Our joint platform will be the place where the most powerful internet lives.”
The official announcement notes that Netomnia and Brsk have already used £300m of debt and that they “plan to use up to £900m of debt to expand footprint to 3m properties, demonstrating the companies’ prudent approach to capital management“.
For context, since 2020, Netomnia and Brsk have raised over £1.3 billion in capital, with backing from investors Advencap, DigitalBridge and Soho Square Capital. DigitalBridge and Advencap will now deploy additional equity financing as part of today’s news.
The merger will be completed in the coming weeks, pending regulatory approval (this will not be an obstacle), allowing customers to benefit from a “alternative FTTP platform that provides a seamless network experience, uniform pricing and improved quality of service across the entire shared surface.”
The deal will create one of the largest Altnets on the market, which will much more easily be able to challenge the leading players in this space such as CityFibre, CommunityFibre and Hyperoptic. In addition, the combined entity creates a much more attractive wholesale option for ISPs, as scale is often a key factor for some providers when planning investments to support a new network.
The newly merged entity will be led by Netomnia and YouFibre’s existing boss, Jeremy Chelot, as Chief Executive Officer (CEO) and Wil Wadsworth as Chief Financial Officer (CFO). Giorgio Iovino and Ian Kock will remain CEO and Chief Operating Officer (COO), respectively, of Brsk.
Finally, I would like to apologize for being slower than usual to discuss this development, but even yours truly needs time off and a 1pm press release on a Saturday tends to clash with lunchtime alcohol consumption and a chaotic home life 🙂.