Connected Britain 2025 highlights the UK’s need for a consolidation catalyst

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Summary

Connected Britain 2025, held in London, celebrated the UK’s fiber rollout while highlighting the ongoing challenge of market fragmentation with over 100 altnets competing for share. Rising costs and financial pressure underline the urgent need for consolidation.

The UK market remains fragmented and in need of consolidation

The UK used to be a fiber laggard in Europe, but heavy investments from BT/Openreach and the surge of altnets have transformed the market, with fiber available to 74% of households as of January 2025 (Ofcom). BT CEO Allison Kirkby described the fiber rollout as a “UK infrastructure success story,” but while the UK has surged ahead of countries like Germany, it has led to a different challenge: market fragmentation.

At Connected Britain 2025, the need for consolidation in the UK broadband market was a recurring theme, as it has been for several years. Despite ongoing discussions and several deals, the UK market remains highly fragmented, with over 100 altnets competing for market share. Changed market conditions, including high interest rates, rising build costs, and intense competition, have amplified the urgency of consolidation over the last few years. Overbuilding and the challenges of funding network buildouts have become pressing issues, but large-scale consolidation is yet to take place. As Nexfibre’s CEO Rajiv Datta noted at the event, the market needs a catalyst to drive meaningful change. However, it is not yet clear who will take that catalyst role.

The majority of UK altnets are small and likely to be absorbed through consolidation. CityFibre, the UK’s largest altnet operating under a wholesale-only open-access model, positions itself as a potential consolidator. Earlier this year, it raised £2.3bn to fund its ongoing buildout and acquisitions, marking a strategic shift. Having already acquired Lit Fibre in 2024 and Connexin Infrastructure in 2025, CityFibre plans to make acquisitions a key part of its growth strategy. However, its heavy reliance on investor capital, coupled with one of the lowest take-up rates in the UK and negative cash flow, pose significant challenges. These financial constraints raise doubts about whether shareholders will provide the necessary funding for the large-scale acquisitions and integrations required to establish CityFibre as a scaled wholesale challenger to Openreach. As noted by Netomnia CEO Jeremy Chelot, convincing shareholders to back mergers and acquisitions is more difficult than integrating assets post-merger.

VMO2 and its fiber joint venture Nexfibre are also potential consolidators. VMO2 CTO Jeanie York expressed openness to acquisitions, but Nexfibre’s CEO Rajiv Datta expressed doubts over whether the market is ready for widespread equity deals. As with many UK players, Nexfibre scaled back rollout plans to place a stronger focus on fiber adoption. Operating as a neutral wholesale-only fiber provider with VMO2 as its anchor tenant, Nexfibre recently onboarded its second customer, Giffgaff. However, Giffgaff is a sub-brand within the O2 family, which highlights Nexfibre’s limited diversification of its client base to date. As a wholesale-only player, it will need to sign up additional retail ISPs in order to achieve better network usage. However, wholesale-only operators such as Nexfibre face challenges in attracting retail operators, which have a broad array of alternatives in the highly competitive UK market.

VodafoneThree, another potential consolidator, has not yet announced any plans for market consolidation. Vodafone currently relies on wholesale agreements with Openreach, CityFibre, and Community Fibre. However, fiber infrastructure is seen as a critical infrastructure and might also be beneficial for Vodafone’s B2B operations, such as connecting data centers.

The financial struggles of many altnets and the UK broadband market’s low churn rates underscore the importance of timely action. Some altnets at Connected Britain 2025 highlighted their mature deployment areas, where they achieve high take-up rates comparable to Openreach’s 38% or higher. However, as Openreach continues to deploy and drive adoption at a rapid pace, waiting for customers to join networks is not a viable strategy for altnets, as capital will deplete in the meantime. In 2025, altnets such as Netomnia and Hyperoptic announced a shift in strategy, opting to use Openreach’s network in selected areas. This marks a departure from their previous focus on exclusively building their own networks.

For consolidation to take place, the market will require another mindset shift. While the focus has already moved from network buildout to adoption, the next step is to make buying and integrating networks more attractive, which is currently seen as complex and expensive. Consolidation should not be seen as a last resort but as a strategic enabler to create a more unified and competitive market. UK players must determine whether they will take on the role of consolidators or be absorbed in the process.

Appendix

Further reading

Assessing and Rethinking the Telecom Utility Model to Improve Profitability in Fiber (September 2025)

Driving FTTP subscriber take-up rates is key for UK altnets and there are avenues worth exploring (September 2025)

Author

Julia Schindler, Principal Analyst, Service Provider Strategy

[email protected]