More UK altnet consolidation as Netomnia merges with Brsk

The combined company will have a network footprint of 1.5 million ready for service (RFS) premises, and has set a target of growing that to 3 million by the end of next year. To date, their respective rollouts have been funded to the tune of a combined £300 million worth of debt. The planned expansion is also debt-funded and is expected to cost a further £900 million.

It only takes one glimpse of Netomnia and Brsk's respective coverage maps to understand why these companies are coming together.

Gloucester-based Netomnia has by far the larger footprint, with scattered deployments across the UK including Northern Ireland. It has a noticeably large presence in the bigger cities of Liverpool and Manchester, plus areas south of Leeds and north of Birmingham.

It is in these locations where Netomnia's networks come within close proximity to Brsk's. The latter's rollout has centred on environs west of Leeds, south of Manchester and west and south of Birmingham. It is also deploying fibre in Blackburn and Burnley.

Wholesale is a capital-intensive, low-margin game where scale can make all the difference, particularly in a market like the UK, where incumbent BT's networks arm Openreach is by far the biggest single player. It makes sense then that an altnet would want to merge its way into adjacent areas rather than resort to overbuild and having to compete with one or more rivals.

"By merging our network expertise and resources, we are creating a powerhouse to deliver an unparalleled Internet experience for our customers, driving innovation and further consolidation among altnets. The additional capital from our investors and support from our lenders is a powerful endorsement of our vision and ability to execute at the highest level," said Netomnia CEO Jeremy Chelot.

"Together, we are set to deliver a fibre network that is not only fast and reliable but also future-proof, ensuring our customers benefit today and tomorrow," said Brsk CEO Giorgio Iovino.

Based on figures from research firm Point Topic, 1.5 million premises puts Netomnia-Brsk ahead of London-focused Community Fibre, which has passed more than 1.3 million. That makes the newly-merged firm the UK's second-largest altnet behind CityFibre, which today covers around 3.6 million premises, and plans to eventually reach 8 million.

However, Netomnia-Brsk might not hold onto this position for very long.

Nexfibre, the wholesale joint venture between Virgin Media O2 (VMO2)'s parents, Telefónica and Liberty Global, has already passed 1 million premises on its quest towards 5 million by 2026, rising to possibly 7 million should the opportunity arise.

Then there's VMO2 itself, which in February announced plans to enter the wholesale market. It is in the process of establishing a subsidiary called NetCo that has cable and fibre assets that reach 16.2 million premises.

These large-scale operators could make life difficult for smaller players. Netomnia and Brsk have cottoned onto the idea that bigger is better, and it will be wholly unsurprising if other altnets follow suit.