In early October, Basalt announced its two UK fibre to the premises network operators, Digital Infrastructure and FullFibre, would merge. Basalt Infrastructure Partners Fund, which holds majority stakes in both businesses, said the merger was a “pro-active move” in the competitive UK fibre market, bringing greater scale and combining routes to market for these established fibre assets.
The combined business will be led by Oliver Helm, CEO of FullFibre, and will integrate both companies existing footprints and continue the build out in more rural regions.
The merger has created one of the larger offerings by UK altnets, with a network accessible by over 250,000 homes and businesses Ready for Service (RFS) today. The combined business has an ambition to deliver 1 million live premises.
Helm said the merger has been driven by “the opportunity in the market”. He added, “The market has always been about scale, but that’s been turbocharged and, fundamentally, it’s about the viable long-term proposition of a business.”
The scale of the combined business, Helm explained, makes it more compelling to wholesalers. He said, “We’re now at the stage where we have very substantial scale. We can add up to 40,000 RFS a month, and we’re consistently adding more than 20-25,000 RFS between us at the moment.
“Having that scale to be able to work with our wholesale partners to offer them a big enough and appealing enough footprint to drive take up on our network is a big deal. Having that scale now just makes sense.
More wholesale opportunities will also be opened to the larger combined business. Helm explained, “It also places us very well to take advantage of some of those opportunities in the market that are open to a predominant wholesale player.
“We now have enough scale to be very relevant to those wholesale players and to start becoming more relevant to national CPs and the aggregators underneath it. Both businesses have a lot of synergies and very complementary teams. It was the right moment to push that button and do it.”
Synergies and opportunities
When asked what the reaction has been internally, Helm offered a thoughtful perspective. He said, “There’s always a little bit of trepidation with these things. Where this has happened elsewhere in the industry, it has sometimes resulted in a lot of redundancies so naturally there are fears about security and change is unsettling for people.
“Having said that, both organisations are comparatively lean and there’s a lot of synergies. Where I have gaps, Digital Infrastructure has strengths, and vice versa.
“So, for us, this is a big opportunity, and the teams are seeing that. Yes, there’s a certain degree of concern and change is unsettling, but they understand that the synergies and the opportunities are enormous. This takes us from being what was quite a viable network, to being a very viable long-term proposition. There’s a lot of excitement bubbling around the businesses.”
Helm reflected that, whilst his to-do list has grown as a result of the merger, he is also lucky to have “an extremely competent management team”.
He added, “They’re more than capable of doing this and keeping the wheels moving. For me, it’s really simple. We are going to offer this as a single unified footprint to our CPs very quickly. At the same time, it is absolutely about the people. We’ve got some really talented, really skilled people. We need to make sure that they are feeling confident and safe to keep pushing and growing the business as we drive through.
“There’s loads of other stuff underneath that. We want to keep growing and our focus on rural builds is only increasing. But those are the two priorities: a unified footprint extremely fast, which we’re well on track for, and then making sure that we’re really leveraging those people to kick up a gear. It’s not just about one plus one is two in times of growth, it’s about one plus one making three.”
A larger footprint
The combined business, Helm explained, will keep the focus on the Channel. Helm said, “This is a wholesale offering. It’s always going to be a wholesale offering. And we’re very clear that the value is in the wholesale network asset.”
The internet service provider (ISP) of Digital Infrastructure, BeFibre, which today provides retail services via both the FullFibre and Digital Infrastructure networks, will remain part of the group as a customer of the enhanced wholesale platform. Helm explained how this will work going forward.
He said, “BeFibre will have access to network on the same terms as our existing CPs and it’s not the plan that BeFibre will deliver the predominant take across this network.”
Helm emphasised, “This is absolutely about a level playing field. We’ve got the brand Fibre Heroes, which we’ve been pushing for quite a long time to help CPs, and we’re only going to intensify that. What it means for our existing CPs is the size of footprint they can access just grew significantly, with the same levels of support across the expanded footprint.
“And, for new CPs coming on board, they have access to a much larger area with better economies of scale in working with us versus working with other people as they try and move into wholesale business models.”