On the heels of UK altnet broadband competitor Nextfibre lambasting incumbent broadband wholesaler BT Openreach’s fibre rollout, Barclays analysts have suggested that BT Openreach could eventually lose market share to its multitude of wholesale challengers.
Though analysts don’t see any altnets, whether that be Nextfibre, CityFibre or Hyperoptic, getting above a 20% market share, “we do see Openreach gradually ceding share to altnets and Nexfibre, resulting in Openreach nationwide market share settling around 60% in the medium term vs 74% at present”.
This implies around two million lost customers between now and 2030, “which supports our Openreach valuation of £30 billion”, said Barclays.
Nonetheless, “we expect the other market players will struggle to create meaningful scale or value, unless they can grow market share either organically or inorganically”, analysts added.
Barclays is adamant that consolidation is coming for the broadband sector.
“Most market participants seem to agree that consolidation is essentially inevitable in the UK broadband market, although opinions vary on the likely permutations and likely end-game.
“The UK telecoms market is already seeing considerable M&A, and we believe this will only build from here.”
Earlier today, Nextfibre chief executive Rajiv Datta said BT was acting like a “typical monopoly” at the expense of the end user.
He said: “When you have somebody that has the dominant market share and has had the benefits of being the incumbent all these years, not investing in that core infrastructure is a typical behaviour of a monopoly.”
Despite Nextfibre’s criticism, last December BT Openreach hit halfway in its target of 25 million connected households by 2026.