Original article ISPreview UK:Read More
Two of the largest backers of the UK’s alternative broadband networks, NatWest and Lloyds, have now scaled back new lending to the heavily indebted sector. The move follows an earlier report in August 2025 (here), which revealed that a number of banks had set aside funding to cover loans issued to altnets (now deemed unlikely to be repaid in full).
Over the past few years’ we’ve regularly reported on the growing challenges being faced by network builders. Most of that 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 stubbornly high interest rates (e.g. tackling rising debt repayments).
Many altnets responded to this by switching their strategy from rapid network expansion to focus on commercialisation of what they’ve already built (i.e. growing take-up), which is a sensible approach. But this could also be seen as buying time for natural market consolidation to ramp-up, although it’s so far been moving more slowly than hoped; likely tempered by some unrealistic asset valuations of built infrastructure.
According to the FT (paywall), NatWest and Lloyds have now taken another step by scaling back new lending to the sector. The move, which doesn’t impact existing loans, means that any altnets seeking fresh loans from these banks will need to meet a much higher bar. In the case of Lloyds, they have not implemented a formal or informal policy to halt lending, but are judging prospective clients much more closely on their respective merits.
A spokesperson for Lloyds said:
“Lloyds continually looks for opportunities to help businesses across the UK, in all different sectors and sizes, giving them the funding and support they need to grow.”
A spokesperson for NatWest said:
“We take a considered approach to any lending — whether new or existing customers — and evaluate all decisions on a case-by-case basis.”
None of this will come as a surprise to regular readers of this site and indeed other investors have been taking a more cautious approach for the past couple of years, albeit with some deals still being done. For example, Netomnia completed a £300m junior debt raise in September 2025 (here) and Grain (Grain Connect) confirmed a £225m funding boost – mostly debt and some equity – in July 2025 (here). Not to mention the recent funding deals for GoFibre (here), Wessex Internet (here) and Highland Broadband (here).
As for those in a more difficult position, possible 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. However, it’s important to reflect that, despite the challenges, all of this investment has helped to produce a much wider variety of competition and thus network choice and coverage for consumers.