Community Fibre mothballs network build and cuts jobs

The London-based fibre altnet has been growing its network and adding customers apace in recent months, but has clearly come up against some of the macroeconomic pressures hitting network builders internationally. It issued a statement that sought to put a positive spin on the news, but it's pretty clear that it's having trouble making the numbers stack up for its backers.

It opens with the good news: Community Fibre's fibre-to-the-premises (FTTP) network covers 1.3 million properties in London, or over one-third of homes in the capital, it says, which is a fair number given that the operator announced that it had exceeded the 1 million mark less than two months ago. And it's take-up rate is pretty good too, with 200,000 residential and business customers having signed up.

"Off the back of this success, Community Fibre has decided to pause our network build as we can deliver a stronger return to our investors by focusing even more on our already successful marketing and sales activities and as a result continue to fill our network with even more happy customers," it said.

Excellent work in playing down the negatives there. Clearly you can't polish a build halt announcement, but you can roll it in glitter.

It's a roundabout way of saying that investors are not happy with their returns in the current climate. And Community Fibre has some financial heft behind it.

It sold a majority stake to funds advised by Warburg Pincus and DTCP for an undisclosed sum in 2020, bringing in the new investors alongside existing partners Amber Infrastructure and RPMI Railpen. Back then it said it would spend £400 million on FTTP rollout with a view to reaching 1 million households by 2023; as above, it hit that target only recently.

Then, just over a year ago, Community Fibre signed a new finance facility with a group of lenders worth £985 million, including £685 million in committed facilities plus a further £300 million extension opportunity. That funding was supposed to enable it to reach its longstanding goal of rolling out network to 2.2 million homes by the end of 2024. This week's announcement suggests that it has abandoned this target; it did not disclose how long its build pause will last, but presumably we're not just talking a few weeks or months.

Indeed, the pause will be long enough to necessitate workforce reductions.

"There will be some redundancies, but we are working to minimise those with the opportunities in the other growing parts of our business," the telco said. "Unfortunately, we cannot comment further on the redundancies until the collective consultation process is complete in the new year."

The firm insists that the move will not impact on its existing or future customers; it's clearly keen to keep signing up residences and businesses to its plans.

"We remain committed to bringing better, more affordable, sustainable 100% full fibre broadband to more Londoners," it concluded, which suggests that the network build will restart at some point.

But with broader financial pressures and the threat of overbuild in a highly fragmented UK market continuing, it could be some time before Community Fibre is ready and able to start digging again.