Almost all (96 per cent) altnets are considering M&A and partnerships with other service providers as they look for opportunities to survive and expand in the UK’s competitive broadband market, according to a new survey by Neos Networks.
The research, conducted by Censuswide this year, also highlights some of the hurdles that many altnets face.
When asked about acquiring customers, 55 per cent said that their target customers are locked into preexisting contacts, a clear indicator of the growing competitive pressure from legacy providers. This was followed by a lack of awareness (47 per cent), with many altnets facing competition with up to four other providers in regions where they have networks.
Tough economic conditions are also affecting growth strategies with altnets, with almost half (48 per cent) of those surveyed saying that it has been difficult to access funding over the past year. High interest rates are exacerbating this challenge, with 48 per cent of altnets citing them as the primary reason behind their struggle for funding. Regulatory constraints and strict lending criteria were also listed as significant barriers as altnets looked to secure financing.
Altnets also face other regulatory challenges, including the knock-on impact of BT’s closure of its copper network as it transitions to full fibre. As part of this modernisation, most altnets are now under pressure to remove equipment from BT’s exchanges, which are due to start closing in January 2027. They say it will cost them, on average, £1.4 million, according to our research.
As altnets look for a path forward, almost all (98 per cent) said that they expect to move beyond just offering traditional residential broadband to broaden their services and appeal. This was also cited as the number one long-term ambition for altnets in the survey.
Other findings include:
- 46 per cent plan to launch smart home technology.
- 43 per cent will offer enterprise connectivity.
- 42 per cent will launch security solutions and packages.
- 35 per cent will start offering multi-service solutions – i.e. TV and entertainment.
Fifty five per cent of the altnets surveyed said that improving customer satisfaction is their primary goal for the next few years, beating out other, more revenue-critical operations, such as increasing customer subscriptions and driving operational efficiencies.When asked what technologies they were using to help them differentiate from their competitors, the majority of respondents said that they were deploying software-defined networking and network function virtualisation (53 per cent). 5G fixed wireless access (39 per cent), and AI/ML enabled BSS/BSS automation also ranked highly.
Lee Myall, CEO at Neos Networks, 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."