Two major broadband altnets are close to finalising a merger that will propel them into the ranks of the sector’s largest players amid growing financial pressure to consolidate.
Sky News understands that Truespeed and Freedom Fibre are in advanced talks about a tie-up.
One industry source cautioned that the negotiations could yet fall apart, but said the two companies could be within days of a deal being struck.
If completed, a deal would be the latest in an industry saddled with billions of pounds of debt and at risk of being overrun by a wave of insolvencies.
Truespeed has received £175m of funding from Aviva Investors, a division of the FTSE-100 insurer.
Its operations are concentrated in the west of England, in areas such as Bath, Somerset and south Gloucestershire, with the company having connected 28,000 customers to its network as of last summer.
Last year, Truespeed merged with County Broadband, an altnet focused on East Anglia, to create an operator covering more than 175,000 homes.
A further merger with Freedom Fibre would create a group with access to more than 400,000 premises, according to industry analysts.
Freedom Fibre, which was launched in 2020, has built a presence in Cheshire and Greater Manchester.
In late 2023, it reached agreement to merge with VX UK Holdings, establishing a combined business with more than 285,000 premises passed.
Freedom Fibre is backed by blue-chip infrastructure investors such as Equitix and InfraBridge, which is part of New York-listed DigitalBridge Group.
A number of altnets have put themselves up for sale in recent months after struggling to raise the new financing required to deliver their standalone delivery plans.
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The largest player in the sector behind BT Group’s Openreach arm, CityFibre, completed a £2.3bn refinancing last year which has left it well-placed to spearhead industry consolidation.
The financial strains on the sector have been illustrated by the plight of companies such as G.Network, which had raised hundreds of millions of pounds in debt and equity funding.
Focused on central London, it has been sold to Fitzwalter Capital, a distressed debt fund, and it is now expected to be sold again in the near future.
Meanwhile, Gigaclear, in which Equitix is also a shareholder, is expected to be taken over by its lenders following a failed sale process, the Financial Times reported last week.
Spokespeople for Aviva Investors and Equitix declined to comment.