CityFibre layoffs - what it means for BT29 Jan 2026 11:25
Well, this is obviously good news for BT, as it throws into sharp relief the problems facing the altnets just days before BT’s results. CityFibre is the largest and arguably most viable of these competitors, so their performance matters. They have laid a lot of fibre, reporting 4.7 million premises passed and just under 850,000 customers. On the surface, last week’s results looked broadly in line with expectations, with revenues and EBITDA growing and take-up nudging towards 20%. Not bad at all - so why announce layoffs affecting a third of the workforce only a week later?
The answer is that things are clearly not as healthy as they have been presented, and it all comes down to financing. Yes, CityFibre has heavyweight backers, but those investors ultimately want a return. Fire-sale asset disposals or administration are not realistic options, so the company has instead pivoted sharply away from new network builds toward a ‘consolidation’ strategy. Not long ago, CityFibre was talking about passing 8 million premises by the end of 2025 — a target that has clearly been abandoned. Growth is now expected to come from acquiring other networks rather than building its own.
This abrupt strategic shift reflects a broader problem - the altnet model was built on the assumption of cheap money for ever. That assumption has now collided with reality. Interest rates are higher and are unlikely to fall meaningfully any time soon. The recent results looked encouraging - more customers, higher revenues, improving EBITDA — but they glossed over the real issue.....leverage!
CityFibre’s net debt is around £3.7 billion at the end of 2025. With fewer than 850,000 paying customers, that implies over £4,000 of debt per customer - an extraordinary level of leverage, at least double that of BT. Crucially, around £1 billion of this debt is owed to banks such as ABN AMRO, Lloyds, NatWest and Société Générale, who will expect regular interest payments and would rank ahead of equity investors in the event of administration or bankruptcy. It is hardly surprising that this is making equity investors increasingly jittery.
The immediate response is obvious - stop bleeding cash. That means slowing or stopping new builds, cutting headcount, and trying to improve the optics of the bottom line. But the underlying problem remains. CityFibre is not profitable because it has been aggressively undercutting rivals to win customers - a tactic that may boost take-up in the short term, but is fundamentally unsustainable. Even a baby knows that. The layoffs are not a sign of strength or consolidation, they are an admission that the original altnet growth story no longer works in today’s financial environment.
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