Network operator CityFibre has today published their annual accounts to the end of 2023, which among other things reveals that the provider is seeking fresh investment to fuel the ongoing roll-out of their 10Gbps capable Fibre-to-the-Premises (FTTP) based broadband ISP network and avoid problems further down the line.

Just to recap. The alternative network operator currently still aspires to cover up to 8 million UK premises with their new full fibre network (funded by c.£2.4bn in equity, c.£4.9bn debt and c.£800m of BDUK / public subsidy) – representing c.30% of the UK. So far, they’ve covered around 3.8m premises and have connected 400,000 customers (8th May 2024).

CityFibre has also won several stated aid funded contracts under the Government’s £5bn Project Gigabit broadband roll-out scheme, which is focused on upgrading the final 10-20% of hardest to reach premises (usually those in rural areas). The operator expects these to help boost their coverage by another 1.3 million premises.

However, it remains unclear precisely when they’ll reach the 8 million target, with their current build + M&A plan potentially get them up to c.6m (if it all goes well). The operator has already been through some redundancies and scaled back quite a few of their commercial builds at the start of 2024, largely in order to focus on the aforementioned delivery for Project Gigabit.

New results and a material uncertainty

The latest annual report, which covers the period to the end of December 2023, notes that CityFibre’s saw a big increase in revenue to £99.67m in 2023 (2022: £30.97m), added 163,000 customers and they had a gross profit of £42.76m (2022: –£20.19m).

The above is generally very positive, but on the flip side they also recorded a total loss for the year of £419.3m and that’s a surge on the £94.15m recorded in 2022 – dwarfing revenue. Gross debt also increased by £1.3bn million to £3.13bn (2022: £1.83bn) and that should be considered against the company having total assets of £4.172bn (2022: £3.221bn).

Suffice to say that, with key sources of funding due to run out by the middle of 2025, CityFibre are on the hunt for fresh investment and are said to have appointed US investment bank Evercore to help find a solution.

Extract from Director’s Report

As the Group and Company are reliant on securing further external funding which is not guaranteed, a material uncertainty exists which may cast significant doubt on the ability of the Group and Company to continue as a going concern and as a result they may be unable to realise this assets and discharge their liabilities in the normal course of business.

The financial statements for the Group and Company are prepared on a going concern basis, with the identification of this material uncertainty, but the Directors have a reasonable expectation that the Group can continue in operation and meet its liabilities as they fall due.

The ultimate parent company, Connect Infrastructure Topco Limited, has confirmed it will continue to provide financial support to the Group and Company to such levels as to enable the Group and Company to be able to pay its debts as and when they fall due for payment, for at least 12 months from the approval of these financial statements.

The need for further funding is nothing new and other network operators are facing many of the same challenges, much of which has been fueled by high interest rates, rising build costs and agressive competition from rivals that can make it harder to grow take-up. In addition, the current environment also makes it harder to attract fresh investment.

However, despite the challenges, CityFibre still views itself as being in a “strong position” as they approach future financing, not least due positive EBITDA, the recent addition of Sky Broadband to their portfolio of supporting ISPs, the ongoing acquisition and integration of altnet provider Lit Fibre, and the Project Gigabit wins. But there’s no doubt that this remains a difficult period and not just for CityFibre.

A CityFibre spokesperson said:

“We are at a particularly capital-intensive phase of our long-term business plan, as we accelerate our build to at least 8 million premises and invest billions into the UK’s digital infrastructure. But 2024 is proving to be a significant year for CityFibre: we are EBITDA positive, we’ve secured a long-term partnership with Sky and we’re a trusted partner of Government, which has awarded us £800m to connect rural communities to full fibre broadband as part of Project Gigabit.

CityFibre is in a strong position and we are raising financing in line with our long-term plan, building on our positive momentum throughout 2024 and cementing CityFibre’s place as the UKs third digital network.”

At the end of the day, there aren’t too many unexpected surprises to be found in the operator’s annual report, particularly given previous developments and the state of the wider market. Much will now depend upon the operator’s ability to resolve their financing issues and to produce more of those M&As (mergers and acquisitions) that they were so boldly talking about earlier in the year.

All of this will also provide some much-needed food for thought when Ofcom begins their Telecoms Access Review 2026 (TAR) in the near future, as the regulator will have to be careful with a market that is currently under such a significant strain.

The Chief Commercial Officer (CCO) of UK broadband operator Openreach (BT), Katie Milligan, has told Richard Tang, the CEO of ISP Zen Internet, in a new interview that there are “no plans” for a third phase of “Equinox” price discounts on FTTP broadband services “at the moment“. The operator also touches on the possibility of faster speeds, like 3Gbps, among other things.

Just to recap. Openreach’s roll-out of a new 1.8Gbps speed Fibre-to-the-Premises (FTTP) broadband network, which is costing them up to £15bn, has already reached nearly 16 million UK premises and they’re aiming to hit 25m by December 2026 (here), before reaching up to 30 million by 2030.

The national average take-up across their network is currently sitting around 34%. But Katie noted in today’s new interview that this is now “tending toward 50%” in footprints that are 2 years old, which will no doubt be something that rival networks will remain concerned about. Speaking of which, the operator’s FTTP customer base – across multiple supporting ISPs (e.g. BT, Sky Broadband, iDNET, Vodafone, TalkTalk and many more) – is now just going over 5.5 million.

Most of Richard’s interview with Katie focuses upon the issues around getting more women into senior technology roles, although we’re naturally more focused on the network, competition and service delivery side of the discussion, which produced some interesting remarks.

For example, on Sky Broadband’s recent decision to start diversifying by harnessing CityFibre’s rival network (here), Katie says Openreach expected it to happen and then uses this to support their plan to push Ofcom for more deregulation in the forthcoming Telecoms Access Review 2026 (note: other than BT, Sky is their biggest customer).

“We always knew it would happen at some point. On a personal level, did I want it to happen? Maybe not, but the reality is it’s completely rational, and it shows that the market is working,” said Katie before adding: “When you’ve got this level of competition, actually we think there could be even further deregulation … There will be geographic areas where we will look for deregulation, very similar to what we’ve seen in the Ethernet market where there’s a central London area etc. We have to be able to compete.”

Price cuts and faster speeds

However, consumers hoping that Openreach might cut their wholesale prices on FTTP lines even further will be disappointed, since Katie re-iterated that they have no current plans for an Equinox 3 discount scheme. The prior Equinox 2 scheme, which was strongly opposed by smaller alternative networks, was cleared by Ofcom in 2023 (here). At that time the operator said they did not intend to “initiate further changes until at least 31st March 2026“, thus Katie isn’t saying anything new (the date given is after Ofcom’s next review / TAR).

“There are no plans for [Equinox 3 discounts on FTTP] at the moment. Openreach will do entirely what’s rational … but the priority for us at the moment is building the network at pace, and being the lowest cost builder and connector,” said Katie. But we always take the phrase “no plans” with a pinch of salt, since it’s easily one of the most used and abused in the PR arsenal. Plans can and often do change, frequently at short notice, although in this case it’s likely to remain true until at least April 2026.

The discussion then switched to multi-gigabit speeds. At present Openreach’s fastest consumer FTTP tier is 1.8Gbps (1800Mbps), although this is limited to uploads of 120Mbps (220Mbps for businesses). But the operator is planning to launch symmetric speeds in their Project Gigabit build areas from April 2025, which will harness 10Gbps capable XGS-PON technology (here).

However, many of the operator’s rivals have already launched faster 2-3Gbps tiers, with some even reaching the 7-10Gbps territory (e.g. YouFibre, B4RN etc.). Interestingly, on this point, Katie appears to hint that the operator might be considering a future speed boost to 3Gbps, but this could equally be just a random example for the purpose of the interview. In any case, it’s all an issue of demand and flexibility to adapt.

“Do I think residential customers will be asking, in the next 5 years, I need 3Gbps? No. But they could do and the priority for us is to make sure that we’re making the investment ahead of time, so we are putting in the Combi cards (ComboPON) and building our plans for XGS-PON etc,” said Katie. “The choice for us is to have optionality as to when we switch it on. But I don’t necessarily think it will come from a customer pull. I think it will be more around having it there and then working out what the level of demand is, before rolling it out.”

Speaking of which, Katie also confirmed that their future Ethernet Access Direct 2.0 (EAD2) product for business customers and network operators, which is something we revealed a year ago (here), should finally enter the pilot phase with ISPs during 2025. This is roughly in keeping with what we reported before.

Remote rural builds

Finally, the interview switched to a focus on the challenges of building FTTP into some of the remotest rural areas, which Openreach has recently been doing commercially. But they’re set to go even deeper after scooping the larger Type C (cross-regional) build contracts under the Government’s £5bn Project Gigabit scheme (here) – reflecting up to £800m (state aid) to help upgrade 312,000 premises in remote areas of Scotland, England and Wales.

The interview also touched on the question of limits, since some locations are so remote as to currently be unviable for FTTP, even under Project Gigabit. “It will come down to individual premises, as opposed to whole areas. and then it if becomes disproportionately expensive, then we might have a discussion around whether or not there’s a handful of homes that we don’t do. But I can’t see at this point that we would be making these agreements now … we’ll work that out at the end of the decade,” said Katie.

Katie also confirmed that Openreach “didn’t bid” on the Type A and B [Project Gigabit] contracts because “they didn’t work for us … Either due to the scale of them or some of the commercial terms. We wanted to go big, just by virtue of our scale, and Type C was perfect for that.” Generally, most of the A/B contracts have been won by smaller alternative networks, as well as some larger players like CityFibre.

However, Katie also pointed out that they were still likely to build beyond the contract 312,000 premises under Type C, which is due to additionality (i.e. separately expanding coverage out via commercial investment, based on the same geographic areas passed using public investment). Put another way, rolling out into Type C areas will make some other areas viable for commercial build, which might not have been possible to reach before.

As usual, Richard Tang has managed to put together another interesting interview, which can be viewed in full below.

London-based alternative broadband provider Pulse Fibre, which is currently aiming to complete over 250,000 unique “full fibre” (FTTP) connections into new build dwellings and MDUs (here), has just put in an application for Code Powers from Ofcom to help with their network expansion plans.

Applications for Code Powers are typically sought to help speed-up deployments of new fibre and cut costs, not least by reducing the number of licences needed for street works. The powers can also help with supporting access to run new fibre via Openreach’s (BT) existing cable ducts and poles (PIA).

In the case of Pulse Fibre, the operator notes that it installs the “vast majority of its infrastructure” in/on private land, through agreement with Developers and “to date has not had to deploy any infrastructure in/on highways“.

However, in the future, Pulse Fibre said they expect to install “a small amount of infrastructure” on the highways, usually consisting of cabinets and ducting around the boundary or adjacent to the development sites, which is where Code Powers could make their life easier.

Code Powers Statement

The Applicant operates a fixed wireless access (FWA) network in England. The Applicant seeks Code powers to facilitate the expansion of its FWA network and the deployment of a fibre to the premises (FTTP) network in England.

The Applicant currently deploys FTTP infrastructure to new housing developments only and does not deploy where another operator is already present, choosing instead to provide connectivity where it is not currently accessible.

Otherwise, the application doesn’t reveal any big surprises, and Ofcom has already given their provisional approval.

Contributed Article

By Anouk Sajot, Sales Manager – Enterprise, Field Services – EMEA at Deepomatic

The United Kingdom has seen a significant increase in FTTx deployment, rapidly expanding from 28% full fibre coverage in 2021 to 52% in 2023, with projections reaching 91% by 2026. The establishment of the Physical Infrastructure Access (PIA) framework has played a pivotal role, enabling multiple alternative network providers (Altnets) to utilize Openreach’s existing infrastructure, saving them the effort of building from scratch. However, the overall progress of FTTx deployment is greatly slowed down by manual quality control processes.

As an Altnet, you engage build partners to assist in deploying your network infrastructure. To maintain accountability and ensure that build partners adhere to the project’s specifications, they must submit comprehensive build completion reports to Altnets. These reports include visual documentation through photographs of the work carried out in the field. However, there are instances when build partners encounter damages to Openreach’s infrastructure, and they are obligated to report these incidents following PIA regulations. Here, the QC process takes up to 5 weeks due to manual photo verification and lack of standardized formats. This delay in quality control highlights a significant bottleneck in FTTx deployment.

Information gathered in the fiber UK market reveals that approximately 80% of reports submitted by build partners regarding damages to Openreach’s infrastructure are initially rejected by Altnets, with 40% still not accepted upon a second submission. Additionally, Openreach rejects 20% of these reports. These rejections result in project delays, affecting time to revenue, not mentioning penalties from Openreach to AltNets for each non-compliant documentation. These costs are incurred because contractors’ field engineers do not have the proper tools to capture photos that meet compliance standards.

Quality audits encompass tasks like manual remote checks to validate the conformity of photos and verify that the work done is correct. This asynchronous process creates delays as it detects photo quality or job conformity problems when the field engineers are long gone from their job sites, leading to on-site revisits. This issue arises because field engineers lack the tools to complete their tasks during the initial visit effectively.

Additionally, build partners ask to get paid quickly as they pay their field workers upon the reception of operation documentation. However, given that this documentation is verified post-work, payment is not based on tangible proof that the job was done correctly. This leads to cash flow issues affecting financial stability and slowing project progression.

Embracing visual AI to solve the compliance issue

As an Altnet, implementing a visual AI technology at the heart of your FTTx operations, from build to roll-out, can help address the compliance challenges and unlock substantial economic benefits:

Allow field engineers to benefit from direct feedback on the quality of the photos they take (brightness, contrast level, framing, angle, etc.) contributing to a higher acceptance rate of PIA reports, which leads to higher revenues and fewer penalties.
Increase field operations’ First Time Right rate by giving field engineers the means to do their job right on the first visit.
Reduce the QC feedback loop from weeks to minutes and stay on track with deployment agenda. Thanks to quality control automation, invoicing and payment can also be indexed on the analysis results and carried out without requiring costly admin processes.
Finally, scale up the number of operations performed without increasing quality control resources, as AI automatically oversees each operation.

Given the UK’s goal of maintaining a rapid deployment pace to connect more of their citizens, it becomes crucial for Altnets and build partners to embark on a revolution by leveraging AI to automate their build acceptance process.

Find out more about how visual AI can help you.

Keep up to date with the latest international telecoms news by subscribing to the Total Telecom daily newsletter  

Also in the news:
Vodafone and Three defend merger amid CMA warnings
Verizon offloads mobile towers to Vertical Bridge for $3.3bn
Korea Telecom and Microsoft sign multibillion-dollar AI partnership

Interview

On day 2 of this year’s Connected Britain, we caught up with Craig Jones, UK Head of Telecoms.

Jones spoke to us about the company’s manufacturing sustainability initiatives, upcoming R&D targets, and Emetelle’s recent acquisition of Ridgemount Technologies, a company Emtelle had previously worked with for over a decade.

Watch the full interview here!

News 

The platform will allow customers to “hit the cloud running”, says BT 

Photo Credit: BT

BT has announced it has switched on its new Global Fabric platform, a network-as-a-service (NaaS) solution designed to help businesses take up the growing demands of AI and multi-cloud environments.  

The platform, called Global Fabric, is currently undergoing live testing and is set to launch in early 2025. 

BT has already installed Global Fabric’s core network hardware (i.e., points of presence [PoPs]_ in over 45 carrier neutral cloud data centres across the world, with this expected to rise to 140 by 2025. These PoPs act as gateways for businesses to connect to their partners, their apps, and their workloads hosted in across multiple clouds around the world. 

According to BT, this will allow companies to scale quickly and securely, which will be especially useful given unpredictable AI-driven data spikes. Unlike legacy networks, which take weeks to set up or modify, Global Fabric will also enable real-time adjustments, boosting efficiency. 

“BT’s Global Fabric will help customers hit the cloud running,” said Colin Bannon, Chief Technology Officer of BT Business in a press release. “It will give them a choice of the world’s best cloud locations to interconnect with their customers, partners and suppliers, making them easier to do business with not just today but tomorrow too. With the achievement of our latest Global Fabric delivery milestones, we take another step closer to a new age of AI-ready, digital interconnectivity.” 

Ahead of the launch, BT will release a demo of Global Fabric’s management portal by November, allowing customers to test network configurations and explore API integrations.  

Keep up to date with the latest telecoms news by subscribing to the Total Telecom daily newsletter 

Also in the news:
Meta resumes use of UK user posts to train its AI models
Verizon’s 4,800 job cuts will cost over $1.9 billion
CMA questions Vodafone–Three merger after second probe

UK ISP Sky Broadband today claims to have become “the UK’s only major provider” to launch a “dedicated 24/7 switching support service” for consumers moving to their service, which they say means “customers can get through to a real person with any questions about switching their broadband, day or night.”

The move comes shortly after the market regulator, Ofcom, announced that its new and much delayed One Touch Switching (OTS) system had finally been introduced, which aims to make it easier for consumers to change broadband provider.

However, the process for OTS is being introduced through the industry-led One Touch Switching Company (TOTSCo), which is likely to be a bit of a bumpy ride until at least 24th October 2024, due to ongoing issues with the new process (here). This might help to explain why Sky feels it needs a dedicated switching support service.

On the other hand, the “dedicated” team for this will be handling exactly the same sort of issues as a general 24/7 support channel, so we wouldn’t necessarily describe this as being all that different from what a number of other ISPs already offer. But it’s still good to see Sky proactively recognising the need for extra support in this area, even if this is something that other providers will already be doing behind the scenes.

Sky Statement

As the UK’s least complained about major provider according to Ofcom’s quarterly complaints report, Sky Broadband has launched the 24/7 switching support service to continue to put customers first. When switching to Sky Broadband we’ll support customers with:

The Digital Hub: After switching to Sky Broadband customers will get access to the digital hub packed with everything they need to know when switching their broadband, from set up to billing. If customers can’t get the answers they need there, the 24/7 switching support service means they’ll always be able to get through to a real person.  
24/7 Service: Customers can speak to an agent via phone between 8am and 8pm, or use the online chat function from 8pm to 8am for round the clock support.  
Expert Engineers: Sky Broadband also has expert engineers on hand if needed to help customers switch and stay connected. 

For even more reasons to switch to Sky Broadband, its Full Fibre 300 package is now at its lowest ever price, just £29pm (with a 24 month contract – prices may change during contract), until the 23rd October, with savings of £11pm and average download speeds of 300Mb/s.

Amber Pine, MD of Connectivity at Sky Broadband, said: “We know switching broadband providers is a big decision for our customers, so we’re making it easier than ever. As the UK’s only major provider with a 24/7 broadband switching support service, we can help with round the clock questions about your Sky Broadband or even change your Full Fibre installation date in the early hours of the morning!”

News 

The deal will support the extraction and recycling of copper cable from BT’s network until 2028 

BT has secured £105 million from the sale of its surplus copper cables, according to a Guardian article published today. 

The deal with global recycler EMR (European Metal Recycling) involves selling copper granules from the 3,300 tonnes of copper cables that BT has already removed in its journey to upgrade the nation’s infrastructure to full fibre. 

BT’s ongoing fibre rollout aims to reach 25 million homes by 2026, with potential to recover up to 200,000 tonnes of copper over the next decade. 

According to the Guardian article, it is currently too early to estimate the full financial value of BT’s copper, although it is considered a significant revenue stream for BT. Back in May, Openreach explained to Bloomberg that “recovering the copper cables generates a net income, even after the costs of extracting the cables and processing them.” 

“As we look to recover and reuse scarce resources like copper in line with our commitment to sustainability, we estimate that as we replace old copper networks with fibre, we’ll be able to recover up to 200,000 tonnes of copper through the 2030s – in line with customer migrations,” said Openreach. 

Earlier this year, a report from engineering firm TXO said that telecoms companies around the world could expect to recover up to 800,000 tons of copper by 2035, worth up to $7 billion at today’s prices. Post-pandemic, the price of copper has risen by nearly 50%, and this is set to grow even more by 2040. While becoming obsolete in the telecoms industry, the metal is widely used in other industries, such as electric vehicles and renewable energy. 

Keep up to date with the latest international telecoms news by subscribing to the Total Telecom daily newsletter  

Also in the news:
Vodafone and Three defend merger amid CMA warnings
Verizon offloads mobile towers to Vertical Bridge for $3.3bn
Korea Telecom and Microsoft sign multibillion-dollar AI partnership

Interview

As homes and businesses become increasingly connected, with more devices and higher requirements, quality of experience is becoming a key selling point for broadband service providers.

At Connected Britain 2024 we caught up with Dan Bloch, Senior Vice President – Global Solutions at Calix, to discuss the company’s 25-year journey from hardware to software and what the future holds for connected homes and businesses

Check out our full interview below!

Keep up to date with the latest international telecoms news by subscribing to the Total Telecom daily newsletter   

Also in the news:
Meta resumes use of UK user posts to train its AI models
Verizon’s 4,800 job cuts will cost over $1.9 billion
CMA questions Vodafone–Three merger after second probe

Simon Dodsworth Joins Linxa as CEO to Lead Next Phase of Growth

Telecom industry veteran, Simon Dodsworth, takes the helm at Linxa, aiming to strengthen the company’s position as the premier partner for voice and messaging operators and carriers worldwide.

London, October 1, 2024 – Linxa, a global leader in telecom software solutions, proudly announces the appointment of Simon Dodsworth as its new Chief Executive Officer, effective immediately. Simon transitions to Linxa from Arelion, where he played a pivotal role in transforming global voice and messaging services, positioning the company as a top-tier provider of telecom solutions. With his expertise in scaling businesses, operational efficiency, and fostering global partnerships, Simon is uniquely positioned to lead Linxa into its next chapter.

Having been a long-time customer of Linxa, Simon was deeply impressed by the unparalleled quality and innovation of its products. His decision to step into the CEO role is driven by a passion for the company’s excellence and a belief in its potential to shape the future of telecom operations on a global scale. “Throughout my engagement with Linxa as a customer, it was always clear that this was a different breed of vendor, in both thought and deed. Taking the opportunity to steer the company on its future journey was one of the easiest decisions of my career.” said Dodsworth.

In his new role, Simon is committed to building on Linxa’s strong foundation and driving forward with a vision to strengthen Linxa’s position as the partner of choice for voice and messaging operators and carriers worldwide. “Our goal is to be recognized as the industry leader, providing our customers with the tools and insights they need to thrive in an increasingly complex and competitive market. My focus will be driving innovation, and ensuring we deliver unmatched value to our clients.”

Simon’s extensive experience in managing global voice operations and his strategic vision are set to propel Linxa to new heights. His leadership will be instrumental in navigating the evolving challenges of the telecom industry, while reinforcing Linxa’s reputation for excellence and customer-centric solutions.

“Simon’s passion for Linxa, combined with his proven track record, makes him the perfect fit to lead our company into its next chapter,” said Ali Gazioğlu, co-Founder, Linxa. “We are excited about the future under his leadership and are confident that Simon’s vision will help us achieve our goal of helping our customers to take their business to the next level.”

About Linxa

Linxa delivers telecom software platforms designed to make it simpler and faster to grow profitability and capture new revenue in the complex telecom market. Along with high performance switching and network products, we offer tools and support to efficiently manage rating, pricing, routing, monitoring / reporting and invoicing with high levels of automation. This enables telecom providers to focus on their core business, reduce fraud and disputes, while optimizing routing and making real-time decisions based on price and quality. Linxa has offices in the UK and Turkey with local presence in USA, Sweden, Netherlands, Germany, Tunisia, South Africa and Australia.

www.linxa.com

Linxa

Press Relations

Tel: +44 203 865 5555

Email: info@linxa.com