BT has experienced a significant blow to its market value, with approximately £1bn lost from BT’s value following recent broadband agreement with rival CityFibre. The deal, announced on Tuesday, marks a major shift in the UK broadband landscape, impacting BT’s longstanding position in the market.
The agreement between Sky and CityFibre will see Sky launch broadband services using CityFibre’s network starting next year. This move is particularly notable as it represents a departure from BT’s Openreach network, which currently hosts Sky’s broadband customers. The immediate market reaction was dramatic, with BT’s shares plunging by up to 8.2% during the day and ultimately closing down 6.4%.
CityFibre, the UK’s largest alternative broadband provider, has been expanding its network rapidly. Currently, its infrastructure reaches 3.8 million homes, but the company plans to extend this to 8 million premises. This expansion poses a significant challenge to BT’s Openreach network and Virgin Media, intensifying competition in the fibre broadband sector.
Despite the sharp decline in BT’s share value, analysts at Citi have suggested that the commercial impact on BT may be manageable. They noted that Sky would maintain its long-term relationship with BT’s Openreach due to the larger scale of BT’s network, which remains a crucial part of the broadband market.
Openreach responded to the news by highlighting its ongoing efforts to enhance its network. The company has reached over 15 million premises with fibre broadband and aims to cover up to 30 million by the end of the decade. An Openreach spokesperson emphasised that the increased competition is a natural development in the evolving fibre broadband market, reflecting the sector’s growth and diversity.
Sky’s new partnership with CityFibre is expected to improve broadband access in remote rural areas that are currently underserved by BT’s network. This move aligns with the broader trend of consolidation and increased competition among alternative network providers, which are reshaping the UK’s digital infrastructure landscape.
CityFibre’s CEO, Greg Mesch, has praised the partnership with Sky as a significant vote of confidence in the company’s business model. He believes that the deal solidifies CityFibre’s position as the UK’s third major digital infrastructure platform and underscores the growing demand for high-quality and reliable digital connectivity.
The ongoing rivalry in the full-fibre broadband market promises to bring more options and potentially better services for consumers, even as it challenges established players like BT.
