Toob joins the UK alt-net revolution

Portsmouth start-up Toob is the latest to cash in on the consumers fibre appetite with £75 million of initial funding, backed by Amber Infrastructure.

Focusing on Portsmouth, the firm will aim to build a network to support 100,000 fibre connections by 2021, with the first to be hooked up by the end of 2019. The start-up was founded by former Vodafone executives Nick Parbutt, who will act as CEO, and Mike Banwell, CFO, while experienced executive Charles McGregor will act as Chairman.

“We are delighted to be partnering with Amber Infrastructure and to have secured Charles as Chairman. toob now has the right people, the right plan and the right funding in place to capitalise on the exciting opportunity ahead of us,” said Parbutt. “We want to enable families, businesses and communities to live, work and play in ways which are only made possible with the advent of gigabit broadband.”

“The amount of internet data used by people in the UK is growing by around half every year,” said Jonathan Oxley, Ofcom’s Competition Group Director. “So, we’ll increasingly need full-fibre broadband services like this to provide faster, more reliable connections and capacity to our homes and offices. These plans are another example of full-fibre being used to build broadband that can support the UK’s digital future.”

The alt-net revolution is starting to roar, and the signs are looking much more positive for fibre-enthusiasts across the UK. Although the UK is currently one of the least equipped to handle the blossoming digital economy, despite what politicians say to you, the industry is starting to get itself into shape. The alt-nets can claim some of the plaudits for this progress.

Although CityFibre developed a reputation for being a bit of a victim in years gone, the proposition was ahead of its time. Few other operators in the UK considered fibre as a priority, though CityFibre focused on developing fibre spines in large towns and cities across the country and is now reaping the benefits. The success has spurred confidence in other alt-nets such as Hyperoptic and Gigaclear, though more are emerging every year.

The issue some of these businesses might face in the future is scale. Fibre is an expensive segment to operate in, and the demanding nature of the UK consumer is forcing the price of connectivity down each year. CityFibre is in a strong position, the tie up with Vodafone is important as are other enterprise relationships, while Hyperoptic and Gigaclear also have established businesses now. Those who are late to the party, might have trouble achieving scale when the price and civil engineering complications are considered.

While the alt-nets are critical in accelerating the pace of change and rollout of fibre across the UK, there might need to be some consolidation should more small providers emerge in the future. This of course will not matter to the UK Government however, which has been searching for ways to entice the industry onto a fibre diet.

Back in 2015, the then Chancellor of the Exchequer George Osborne floated the idea of a new fund for alt-net providers, perhaps realising there was a need to force change through competition and the threat of loss. What should be worth noting is Openreach’s decision last week to launch an industry consultation on the switch to full-fibre, the first step in retiring the legacy copper network.

The alt-nets have been a contributing factor to the changing of the status quo, demonstrating there is a consumer appetite for fibre connectivity, but also highlighting the poor position of Openreach.

There are of course those who would suggest fibre connectivity is not necessary, though a decade ago who would have said we would have been craving the speeds of today. The issue is not whether we need the speeds fibre promises, but readying business and people for the usecases of tomorrow. Who knows what wonderful ideas will emerge, but when the creatives and innovators get their hands-on fibre connectivity speeds, but they will design products and services for these speeds. Fibre connectivity today is more about readiness.

For those who are desperately preaching the case for fibre connectivity, the alt-nets seem to be a perfectly suitable catalyst for change. The UK is still miles behind the rest of Europe, data from IDate suggest fibre penetration in the UK is only 1.3% compared to 44% in Spain, but there does seem to be progress being made.

Infracapital secures SSE Enterprise Telecoms stake

Infracapital has become the latest investment firm to secure a stake in the increasingly popular connectivity industry with a £380 million investment in SSE Enterprise Telecoms.

The deal will see Infracapital secure a 50% stake in the SSE Enterprise Telecoms business, with £215 million to be paid on completion of the transaction, the end of June, and up to £16 million in a series of instalments depending on the performance of the business in the future.

“Infracapital’s investment in SSE Enterprise Telecoms shows the confidence it has in the future growth of the business,” said Colin Sempill, SSE Enterprise Telecoms MD. “It recognises the success we have achieved to date, building out a great network, winning notable contracts and being relentlessly focused on customer satisfaction. Both parties see this as an opportunity to help develop the network infrastructure that this country needs to turn the vision of the UK’s digital economy into reality.”

“High-speed connectivity is vital to economic growth and prosperity and we are delighted to announce this partnership with SSE plc.,” said James Harraway, Infracapital Director. “SSE Enterprise Telecoms is an established telecoms infrastructure provider and is well positioned to support growth in this critical sector. Infracapital has considerable expertise of investing in digital infrastructure and we look forward to working closely with our new partners as the business continues to grow, deliver new projects and expand its networks.”

While SSE Enterprise Telecoms is not necessarily a heavyweight on the UK’s connectivity scene, this investment is just another example of financial firms becoming increasingly interested in alternative network providers, or Alt-nets. Hyperoptic is another example, having secured £250 million from eight international banks to extend its full fibre optic network, while CityFibre secured a debt package of £1.12 billion last month, after being bought by a Wall Street investment consortium in April.

More than anything else, this is an indication that perhaps things are not going as badly in the telecommunications as some would have you think. It might be going through a rocky time competing with the OTTs, regulations might not be going all the right directions and revenues are not growing at a rate of knots, but such investments show there is confidence in future success. The industry has demonstrated consumers are willing to pay for larger data bundles and fibre connectivity, and now the financial industry is listening more acutely.

For the Alt-nets and the consumer, it is a great sign. Securing more investments in the business, especially from those organizations which are not necessarily chasing the short-term pay out, will provide more security around CAPEX and deployment plans. It might not be the most exciting news from today, but it perhaps some of the most reassuring.