It's fibre all the way for the UK in Q3 21

BT has dropped plans to partner up on fibre, while data shared by rivals CityFibre and Virgin Media O2 shows that high-speed broadband is rolling out apace in the UK.

The UK incumbent in May committed to an acceleration of its fibre-to-the-premises (FTTP) network buildout and simultaneously indicated it was mulling bringing in a strategic partner to help out. Having examined the idea of creating a joint venture with a third party to manage the additional 5 million homes it added to its plan – many in trickier to reach areas – BT has now decided against such a move.

“We have conducted an extensive review and held discussions with prospective investors, however with FTTP build costs coming down and take-up ahead of expectations, we have decided to retain 100% of the project for shareholders and to remain fully focused on driving build and take-up,” BT said, in its first-half results announcement.

Those results, from a financial point of view, were a little uninspiring. Group revenues for the six months to the end of September slipped by 3% to £10.3 billion, while pretax profit slid 5% to just over £1 billion. Adjusted earnings were virtually flat at £3.7 billion. Capex, including the best part of half a billion pounds of spectrum costs, was up by 30% to £2.6 billion.

The FTTP rollout naturally has a bearing on that capital expenditure figure, but fibre spending going forward will be slightly less onerous than BT had previously predicted. It puts group peak capex from FY2023 at £4.8 billion, down from £5 billion previously, and the figure will come down sharply once it passes the height of its FTTP build at the end of 2026.

“BT is on track and with results in-line with our expectations, we are today confirming our financial outlook for FY22 and FY23,” said BT chief executive Philip Jansen. “Looking further out, as we pass the peak of our fibre build and move towards an all-fibre, all-IP network, we expect a reduction in capex of at least £1 billion and lower operating costs of £500 million.”

For now though – albeit with an eye on the purse strings – BT’s operational figures make for more interesting reading.

“After a record six months, Openreach has now rolled out full fibre broadband to almost 6 million premises and continues to lower its build cost,” Jansen said. That equates to a build rate of 47,300 premises per week, with the average build cost per premises having fallen to between £250 and £350.

“Its three largest customers are signed up to the new pricing offer as we see rapid adoption of what will be the UK’s first nationwide full fibre network spanning 25 million premises by 2026,” the CEO said.

In total, 10 retail providers, including Sky and TalkTalk, have signed up to the Equinox long-term FTTP pricing offer, and take-up does indeed continue to grow; Openreach has 1.3 million end-users, an increase of 178,000 over three months. BT’s own retail FTTP customer base stood at 945,000 at the end of September, up by 85,000 in fiscal Q2.

Doubtless part of the reason fibre build costs have come down is because everyone’s at it.

One of the incumbent’s original fibre network rivals CityFibre this week announced that its wholesale FTTP network has now passed 1 million homes. The operator says it is on track to reach up to 8 million homes – we’ll gloss over that ‘up to’ for now – by 2025, which will represent around one third of the UK market. It is building network in 60-plus towns and cities now, a figure that is due to rise to 150 by the end of next year and 285 by 2025.

CityFibre has 30 retail ISPs offering services on its network, including Vodafone, TalkTalk and Zen, all of which have inked long-term deals. However, it does not disclose how many end customers are actually using the network.

“With a million homes now able to access our full fibre connectivity and more added every day, we are focused on supporting our consumer ISP partners to drive service take-up,” said CityFibre CEO Greg Mesch. “We look forward to collaborating with our partners in the coming months to design compelling new packages and initiatives, and to continue raising awareness of the benefits of full fibre.”

Meanwhile, Thursday also brought a results announcement from recently-merged Virgin Media O2, which is taking on the fibre builders with high-speed broadband based on various technologies…but like its rivals is also more keen to talk about coverage than take-up.

Virgin Media O2’s Gigabit footprint covered 12.8 million premises as of the end of September and the company says it is on track to provide complete network-wide coverage of its 1.1 Gbps speeds by the end of this year. The firm’s FTTP upgrade project, which will see it fibre up its whole network by sometime in 2028, is in the pilot phase, and it is also trialling 2.2 Gbps services based on DOCSIS 3.1 in Birmingham and Edinburgh.

It recorded 42,000 broadband net customer additions in the third quarter, which it insists reflects “the continued demand for faster broadband speeds,” the implication being that it has the edge over its rivals there. Unfortunately, not everyone is so forthcoming with their data, so we can’t check that. BT’s FTTP net adds were significantly higher during the same period, but without a total figure for consumer retail broadband customers, all comparisons are meaningless.

In conclusion then, we can say that the UK’s fibre footprint is growing strong, alongside alternative high-speed broadband technologies. But the full picture on broadband take-up remains a little hazy.