Full-fibre alternative network provider Hyperoptic has delivered an annual statement infused with signs of optimism coupled with some clear stress points.
Hyperoptic typically targets urban areas across England, including parts of London, by partnering with housing developers and councils.
It has emerged as a competitor to BT Openreach, having surpassed 1.5 million homes by the end of 2023 (up from fewer than 1.1 million in 2022), with over 310,000 active customers (up from fewer than 277,000 in 2022).
This year, Hyperoptic’s footprint has grown to more than 1.73 million connections and 340,000 active customers.
While this rate of build-out is heading in the right direction, that 1.73 million-home footprint is significantly below the five million in 2024 target laid out when KKR acquired a stake in the business in 2019.
Post-Covid, Hyperoptic rebased those expectations to two million homes passed by an unspecified deadline.
That target looks easily achievable given the rate of expansion in 2023 and into 2024, but it is now a question of how well Hyperoptic can translate this build-out into new, loyal customers.
Its financial performance has been mixed.
While yearly revenue grew 19% in 2023, gross profit margins were squeezed from 79.2% to 78.1% due to higher data centre costs and infrastructure rent.
Interest payments were the real killer in 2023 - they soared more than 140% to £64.5 million.
Hyperoptic’s main lenders are the UK Infrastructure Bank (UKIB) and a spate of international investment banks, while private equity firm KKR has a majority stake in the business.
These factors led to a near doubling of total losses in 2023- from £76 million the previous year to £142 million.
The group’s financing activities in 2023 meant its cash balance remained relatively strong at £13.3 million (down from £165.3 million) and a post-period injection from UKIB has stabilised the balance sheet further.