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Roughly nine months have passed since we reported that alternative UK network operator and ISP G.Network, which has deployed a gigabit speed full fibre (FTTP) broadband network across parts of London, had put up the for sale sign (here). But this afternoon news emerged that the provider had been acquired by FitzWalter Capital for an undisclosed sum.
In case anybody has forgotten, G.Network originally held an aspiration to expand their fibre network to cover 1.3 million premises London by the end of 2026. But like many other altnets they’ve since been impacted by an increasingly competitive environment and rising costs (high build costs, high interest rates etc.). This has already resulted in job cuts and a greater focus on commercialisation, instead of new fibre build (here).
Despite the challenges, the operator has continued to receive funding from long term equity investor Universities Superannuation Scheme (USS), including £85m in June 2024 (here) and “up to an additional” £150m (here) in July 2023. Future such funding rounds seemed likely, unless a deal could be done to find a new owner or consolidate with a rival.
The company’s most recent accounts did however report an 85% increase in turnover to £10.2m in FY2024 and a gross profit of £7.3m (up 62%), with total assets of £453m (up from £394m). But they also suffered an operating loss for the year of £52.8m (down from a loss of £67.2m in the prior year) and are estimated to be carrying a net debt of over £300m (Enders Analysis).
Suffice to say that we weren’t too surprised when it was reported last March (here) that G.Network had instructed bankers at Jefferies and Nomura to engage with potential buyers for the business, although we’d heard similar stories before that hadn’t amounted to anything (here). One key challenge is the fact that their network has already been partly overbuilt by Hyperoptic and CommunityFibre, which are bigger players in London’s altnet space, alongside the established giants of Virgin Media (nexfibre) and Openreach (BT).
G.Network sold
According to some of our industry sources and a report on the FT (paywall), the operator quietly succeeded in finding a buyer over the normally quiet festive period. ISPreview understands that several investors and network operators had expressed an interest in bidding for the business, although in the end a financial buyer in the shape of distressed debt specialist FitzWalter Capital tabled the most attractive offer.
The newspaper reports that G.Network had so far only been able to grow their customer base to just 25,000 (up from 8,664 in March 2022) and that the company’s creditors, including NatWest, Investec and Santander, are bracing to suffer a writedown on their investments. G.Network declined to comment on today’s development when asked by ISPreview.
James Ratzer, Analyst at New Street Research, said:
“Given the company’s losses, it is hard to see an obvious standalone business case. We presume the buyer is a short-term holder and would be keen to sell to another provider as soon as possible.”
Residential customers of G.Network currently pay from £25 per month for a 300Mbps (100Mbps upload) service on a 24-month term (plus a £29 one-off connection charge), which rises to £29 for their 900Mbps (300Mbps upload) plan with free connection or £36 if you want symmetric speeds on that tier. Shorter 12 and 1-month contract options are also available at extra cost.