CityFibre turns a profit sooner than expected

But while the UK altnet was understandably upbeat about its Q1 performance, its announcement was lacking in detail, so we have to take it at its word that, as CEO Greg Mesch put it, the year "got off to a flying start" for CityFibre.

"We've achieved profitability ahead of schedule, increased revenues by more than 30%, reached over 400k customers, secured almost £400 million in new Project Gigabit contracts and acquired Lit Fibre," Mesch declared, in a statement.

That is indeed plenty to crow about. But it would have been nice to know what the firm's earnings and revenues actually look like, for example.

CityFibre tells us it achieved a positive EBITDA performance for the three months to the end of March, having been shooting for a target of breakeven in the first half of the year. It goes without saying that that is good news, but without actual numbers it's hard to quantify. Similarly, a 30%-plus revenue hike year-on-year is a positive development, but some figures would have been nice. CityFibre reported hitting £100 million in revenue for full-year 2023, but we have no numbers for Q1.

Nonetheless, we can accept that this is, as CityFibre describes it, a new phase of growth for the fibre builder. And doubtless there are many other fibre network builders in the UK looking closely at their own balance sheets for signs of breakeven.

Earnings are, of course, driven by customers. As a wholesaler, CityFibre is relying on its retail partners for bums on seats, and while its uptake is not stellar, it is certainly improving. The firm's various fibre networks now cover 3.6 million premises and have exceeded the 400,000 customers milestone, that latter figure being an increase of 77% on the same period last year, CityFibre said. It's also an increase of 63,000 since the start of the year.

CityFibre added that it is now "regularly" adding over 1,000 new customers per day, which suggests the half a million mark may not be far off. But then again, that slightly woolly use of the word regularly leaves us guessing as to its frequency. If it matches its Q1 performance in the upcoming quarters we will likely have a 500,000 customers announcement by September.

Those 3.6 million homes passed represent an increase of 100,000 in 2024 so far, while 3.3 million are classed as ready for service (RFS), up from 3.2 million at end-2023. CityFibre said it is on track to deliver 1 million RFS premises in 2024, which sounds like a big ask based on the year-to-date numbers, but it qualified that the growth will come both from its build programme and M&A.

CityFibre agreed to acquire Lit Fibre for an undisclosed sum earlier this year, which will add 200,000 homes passed to its footprint and a further 100,000 in the pipeline.

That acquisition, plus its own build, including Project Gigabit locations, means CityFibre can see a clear path to reaching 6 million UK premises, which leaves it 2 million short of its 8 million (by an unspecified date) target.

It would not be wise to rule out further M&A action from CityFibre, although the telco is naturally tight-lipped on that score at present. The UK has developed a patchwork of fibre network builders in recent years and it stands to reason that a number of those will need an exit strategy, scale so often being the name of the game in this industry.

CityFibre is finally in the black, but it has many rivals and peers that remain firmly rooted in the red.