Netomnia and Brsk, two of the fastest-growing altnets, have just announced a merger to establish a capital-efficient retail, wholesale and consolidation platform.
Huge news!
And as you’ll read on, some huge statements are being made too…
To start, both networks have had success from both a build perspective and a penetration perspective. As it stands, combined, the two networks will now have an impressive 1.5M RFS footprint (properties that are ready for service).
Collectively, they have 140,000 connected customers. Based on Youfibre (Netnomia’s ISP brand) announcing 80,000 customers three months ago and mentioning connecting 10,000 a month, we can assume Youfibre/Netnomia takes the fair share in that 140,000 combined customer count.
Snip: Cameron Lees, Head of Sales Linkedin:
This merger marks a transformative step for the UK telecoms industry, combining two highly experienced management teams with proven track records who have successfully built fibre and delivered excellent customer service across different businesses. Netomnia and Brsk built 1.5 million premises Ready for Service “RFS” and connected 140,000 customers so far using £300 million of debt. They plan to use up to £900m of debt to grow the footprint to 3 million premises, demonstrating the companies’ prudent approach to capital management.
Since 2020, Netomnia and Brsk have raised over £1.3 billion of capital, with support from investors Advencap (shareholders of both Netomnia and BRSK), DigitalBridge, and Soho Square Capital. DigitalBridge and Advencap will be committing additional equity funding as part of this raise. Recently, Netomnia secured an additional £147 million in debt from two new lenders, JP Morgan (JPM) and Rand Merchant Bank (RMB), joining existing lenders Alpha Bank, Ares, Barclays, HSBC UK, ING, NIBC, Nord/LB, Standard Chartered, RBC, and UKIB.
Comments from the leaders:
Jeremy Chelot, CEO of Netomnia, comments: “By merging our network expertise and resources, we are creating a powerhouse to deliver an unparalleled internet experience for our customers, driving innovation and further consolidation among altnets. The additional capital from our investors and support from our lenders is a powerful endorsement of our vision and ability to execute at the highest level.”
Giorgio Iovino, CEO of Brsk, comments: “The merger is a testament to our shared entrepreneurial spirit and experienced teams that can deliver even more. Together, we are set to deliver a fibre network that is not only fast and reliable but also future-proof, ensuring our customers benefit today and tomorrow. Our joint platform will be where the most powerful internet lives.”
For me, I think this merger is just the start and is the foundation for something far bigger. Hear me out:
It’s no secret that the industry will consolidate (it’s already happening, but not on a huge scale yet) and as it stands, the only network that has been vocal about acquiring smaller networks has been CityFibre. For the country to operate on a fair playing field, there will always need to be around four networks, at a minimum.
In my eyes, Openreach won’t need to acquire; they build at an outrageous rate (78,000 new properties per week) and have, by far, the largest network.
So the question stands, which other two “players” will be looking to mop up the smaller networks?
My guess?
1. Nexfibre
2. Netnomia/BRSK/Youfibre
Of course, this is all guesswork, but this is the first larger merger we’ve had since the networks turned their concentration from the number of properties passed to how many customers are connected. Recently we had the Litf Fbre takeover from CityFibre (worth noting, that was on a share model) (no cash), but that was small compared to this deal. The snippet below provides some understanding of the network size in the market.
Data from January 2024: Thinkbroadband “The State Of Broadband” report (next update July 2024)
Let’s put some more meat on the bones: Jeremy, the Founder of Youfibre & Netnomia, has a proven track record with build, penetration, and debt management (I’m not too clued up on the finance side, so I won’t pretend to write facts and figures, but from what I read in reports, he’s good). In the current market, only a handful of networks are reaching penetration targets. Only a handful are still laying fibre at “go big or go home” rates.
So, for me, it makes complete sense that Youfibre/Netnomia/BRSK will be the fourth big player in the market and will be competing on acquisition against CityFibre & Nexfibre. Let’s be honest: with Jeremy’s track record, he may be able to offer something more attractive for the networks too (IE, cash) (jumping back to the Lit Fibre deal).
Let’s see what happens! And yes, I know what you’re thinking, we need someone from Youfibre/Netnomia/BRSK on the podcast. Let me see what I can do!
