CityFibre and Community Fibre ‘weighing up’ G Network swoop

Cityfibre and Community Fibre are eyeing a takeover of smaller rival G Network, which connects hundreds of thousands of central London premises, according to reports.

G Network, which provides London residents and businesses with fibre broadband, is exploring a sale after a number of parties have expressed in interest, Sky News has said.

City sources said Jefferies and Japanese bank Nomura are acting as advisers to G Network, whose investors include Britain’s university lecturers’ pension scheme, the Universities Superannuation Scheme (USS). In 2023, USS invested £150m in G Network and last month gave it an £85m boost.

G Network declined to comment. Cityfibre and Community Fibre said they do not comment on industry speculation.

The UK’s third-largest broadband provider Cityfibre recently hit profitability ahead of target as sales for the three months ended March 31, 2024, spiked over 30 per cent year on year.

The company bought internet provider Lit Fibre in March and said it plans to close several more similar deals over the next couple of years as it pursues a goal of reaching 8m sites.

It comes amid a period of consolidation in the space of so-called altnets, which are alternative networks that compete with major providers like Openreach and Virgin Media.

The consolidation is driven by a need for increased investment, greater ability to scale and compete effectively with the incumbents, especially as many altnets battle with the higher cost of borrowing.

Enders telecoms analysts have argued that consolidation is essential to the long-term viability of the altnet sector.

In a recent report, they said: “Altnets continued their strong expansion in 2023 but a slowdown in 2024 is looking very likely, with financing drying up due to tougher financial conditions and disappointing operating performances from some.”

“Consolidation is the obvious answer, and the altnets could consolidate into a pure wholesaler (via CityFibre), a retail/wholesale player, or could be absorbed into VMO2/nexfibre,” they explained.