Openreach Faces Rising Competition
“BT is seeing rising broadband infrastructure competition that is putting pressure on both Openreach and Consumer revenues,” said UBS in a research note. The bank pointed to a 12-month price target of 120p for BT shares, well below the current market price hovering around 165-166p.
Most of Openreach’s broadband line losses come from areas where they have yet to deploy their full fibre (FTTP) network. The division is investing up to £15bn to roll out multi-gigabit FTTP, already reaching 18 million UK premises. It aims to cover 25 million by December 2026.
Altnets Pose Growing Threat
While Openreach has delivered strong FTTP take-up of around 35%, rival alternative networks (altnets) are continuing to build at a rapid pace in some areas. Major altnets like CityFibre are also pursuing consolidation to gain significant scale.
“The move by CityFibre to sign up Sky Broadband is another problem for Openreach, although the impact remains to be seen,” said Mark Jackson, editor at ISPreview.co.uk. He noted that Openreach may struggle to match the aggressive pricing of some altnets in the short term.
Challenges of Rural Rollout
UBS suggested that Openreach should deploy FTTP “faster”, but the operator faces challenges as its rollout increasingly shifts to rural areas and smaller towns in the coming years. Network builds tend to slow and costs rise in these locations due to longer distances and harder-to-reach properties.
“It’s going to get tougher,” said John Thompson, a retired telecom engineer in rural Devon. “We’re still waiting for fibre here while a local altnet is already deploying. I may have to switch if Openreach doesn’t hurry up.”
Uncertain Market Outlook
The UK broadband market is in a state of flux as the national FTTP rollout passes the midway point. Virgin Media O2 plans to open its XGS-PON network to wholesale in the near future, potentially giving Openreach a run for its money, especially once XGS-PON upgrades finish in 2028.
“The next few years will be critical,” said Jackson. “Openreach needs to stay focused, move quickly and be willing to compete on price in strategic areas. But the big question is whether the altnets can sustain their early momentum as buildout gets harder and more expensive.”
