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In news that will surprise none of ISPreview’s regular readers. Several major UK banks, such as NatWest and Lloyds, among others, have confirmed that they’re setting aside funding to cover loans that were issued to alternative fibre broadband networks (altnets) and which are now deemed unlikely to be repaid in full.
Regular readers will know that we’ve often had to report on the challenges being experienced by broadband network operators over the past couple of years. The situation has been fuelled by rising build costs, fierce competition from rivals (e.g. overbuild and the challenges of growing take-up) and the difficulties of securing fresh investment during a period of high interest rates (e.g. tackling rising debt repayments).
The fact is that building new Fibre-to-the-Premises (FTTP) based broadband networks from scratch is an extremely expensive business, which often requires long payback periods of around 10-15 years. But this situation was made all the more challenging by the fact that so many altnets sprang up during the same 2-3 year period, with many basing their original plans on the now wrongful expectation of a less competitive market.
In response to the recent challenges, many altnets have since moved to protect themselves by switching their focus from rapid network expansion to strong commercialisation of what they’ve already built (i.e. growing take-up), which is a sensible approach. This could also be seen as buying time for natural market consolidation to take place (we’ve already seen a fair bit of it), although it’s so far been moving more slowly than hoped; likely tempered by some unrealistic asset valuations of built infrastructure.
At the same time many altnets have built up a substantial amount of debt, which is proving difficult to repay in a timely fashion due to the aforementioned challenges (particularly lower than ideal levels of take-up and thus revenues). Some altnets could perhaps arguably be said to have sold investors on being able to achieve a stronger level of take-up than was perhaps realistic.
Loans still need to be repaid
According to the FT (paywall), the Lloyds Banking Group recently confirmed that its commercial banking unit had already set aside £25m to cover loans to the fibre sector that were now deemed unlikely to be repaid in full. At the same time NatWest, which is considered to be one of the banks most exposed to the sector (they’re estimated to have lent about £1bn to altnets), recently reported a £76m impairment in its second-quarter results, which one source said included expected losses on loans to altnets.
The newspaper states that creditors are now holding talks with several altnets, such as Gigaclear, over how they will repay the substantial debts they have accumulated to fund their network deployments. Solutions other than consolidation (or complementary to that) are likely to involve a combination of things, such as reaching agreements with other shareholders to inject extra cash, swapping debt for equity or extending credit facilities etc.
The state-backed National Wealth Fund (formerly known as the UK Infrastructure Bank) is similarly known to have committed £1.1bn for lending to altnets in recent years. The NWF is said to have offered indemnities to lenders on some riskier loans to the sector to encourage investment. “We only commit capital where we are needed and, in the case of altnets, where market appetite is restricted, we have worked to crowd in commercial investors to help meet the government’s Gigabit ambitions,” said a spokesperson for the NWF.
On the flip side, it’s important to reflect that, despite the financial challenges, all of this investment has helped to produce a much wider variety of competition and thus network choice and coverage for consumers. At the end of June 2025 our H1 2025 broadband coverage report revealed that around 88% of UK premises now had access to gigabit-capable broadband speeds (78% when only looking at FTTP) and the UK government expects this to reach c.99% by 2032 (target delayed from 2030); that’s up from just 10% in 2019.
Nevertheless, Enders Analysis calculates that altnets are collectively carrying more than £7bn of net debt and predicts that write-downs in this sector have been “inevitable for some time“. But as ever with such situations, it’s important not to colour every altnet with the same brush.
Some altnets are in a far stronger position than others and inevitably where there are losers, there will also be winners. Put another way, the incumbents of Openreach and Virgin Media cannot afford to rest on their laurels as greater competition is likely to be a sustained reality, even as the number of smaller altnets continues to shrink.