Assembly Research has published a report arguing that consolidation in the UK fibre market is now both inevitable and necessary, as financial pressure mounts on alternative network operators.
The study, titled The Next Chapter in UK Fibre, says the sector is moving beyond a period of rapid network construction into one in which scale and financial resilience will determine which operators survive. It argues that a smaller group of stronger providers would be better placed to sustain long-term competition in wholesale broadband.
At the centre of that argument is the pressure facing so-called altnets, which expanded rapidly during the fibre rollout boom. The report says many are burdened by high debt, continued negative cash flow, pricing pressure and slower-than-expected customer uptake, leaving weaker operators exposed as the market matures.
It presents that strain as a risk not only to individual providers but to the wider broadband market. If operators fall into deeper financial trouble, the effects could spread to consumers, competitive dynamics and the value of public funding committed to fibre deployment.
Market pressure
The report argues that consolidation should not automatically be seen as reducing competition. Instead, combining networks and balance sheets could create wholesale providers with the reach and financial backing to become more credible rivals to Openreach.
That case rests on the view that larger platforms can reduce duplication, improve efficiency and offer internet service providers a broader wholesale alternative. In this reading, greater market concentration would sit alongside, rather than replace, the policy goal of infrastructure-based competition.
nexfibre welcomed the conclusions, which align with its proposed acquisition of Netomnia. It said the deal would combine scale, capital and operational strength while unlocking £3.5 billion of investment into the UK market.
According to nexfibre, the proposed transaction is valued at £2 billion. Together with around 2.1 million Virgin Media O2 premises due to be upgraded to full fibre, the combined footprint would reach about 8 million premises by the end of 2027, it said.
This would put the enlarged business on a stronger footing to challenge Openreach nationally in wholesale fibre. nexfibre, a wholesale-only operator backed by InfraVia Capital Partners, Liberty Global and Telefónica, currently covers more than 2.6 million premises across the UK.
Policy backdrop
The debate over consolidation follows years in which dozens of smaller fibre builders entered the market, encouraged by investor appetite and government ambitions to expand gigabit broadband coverage. That wave increased network build activity and widened full-fibre availability, but it also created overlapping footprints and intense competition for customers.
Assembly Research says the next stage will depend less on build pace alone and more on whether operators can create sustainable businesses at scale. The report suggests wholesale competition will be stronger if it is led by financially secure operators with enough coverage to attract internet service providers.
Rajiv Datta, Chief Executive Officer of nexfibre, said: "Assembly's report captures the reality of the UK fibre market today and reinforces that the next phase must be about scale, sustainability and genuine long-term competition. That's why our planned acquisition of Netomnia is a real turning point for the industry, creating a wholesale challenger with the footprint and funding needed to compete properly at a national scale. By bringing together complementary assets and unlocking further investment, the transaction can help support the market structure the UK needs: one that protects infrastructure competition, gives ISPs more choice, and delivers better outcomes for consumers and businesses."
Assembly Research Founder Matthew Howett also linked the report's findings directly to the proposed deal. "The proposed acquisition of Netomnia by nexfibre is an example of the next chapter in the UK's fibre story, where the market needs to move from fragmentation to consolidation. Bringing together scale and capital will be the key ingredients in creating a stronger rival to Openreach, in line with the policy goal of enduring infrastructure-based competition," he said.