There will be redundancies at Eastbourne-based broadband operator Lightning Fibre as a result of its change of ownership.
The firm, which has been sold to a company which invests in infrastructure projects, has about 200 full-time equivalent staff.
A company spokesman told the Eastbourne Reporter: “We have changed our strategy to focus more on growing customer take-up, rather than on expanding the network coverage. This will mean a restructure of the business and some redundancies.”
Lightning Fibre, which has connected around 60,000 premises out of a target of 140,000, has been taken over by a company which invests across infrastructure projects.
Industry watchers say full fibre network operators are under pressure from rising build costs, competition and the need to sign enough customers to satisfy investors.
Philip Armstrong and Philip Watkins of specialist business adviser firm FRP Advisor were appointed as joint administrators to Lightning Fibre on February 19.
In a statement, they confirmed that they had secured a sale of the business and assets to LF Holdco 2 Ltd, a wholly owned subsidiary of Foresight Fibre Holdco Ltd.
“The sale ensures that the Lightning Fibre business will continue to trade as normal and the joint administrators wish the management team every success as they take the business forward,” the administrators added.
Lightning Fibre has been backed by private equity group Foresight, the ultimate parent company of these subsidiaries, for the last few years.
Amit Thakrar, director at Foresight Group, said: “Foresight is fully committed to Lightning Fibre, and we have every confidence in the senior management team to further develop the company.”
During administration, a company is protected from legal action by anyone owed money (creditors) and nobody can apply to wind up the company.
A Lightning Fibre spokesman said the deal was as a “pre-pack administration”.
Under this system, the sale of the business and any assets are negotiated before the formal appointment of administrators, who then conclude the deal.
This differs from standard administration where part of the administrator’s role is to market the business for sale or consider alternatives if that’s not viable.
The latest accounts available for Lightning Fibre for the year to March 2022 shows that it owed £21.3 million in long-term debts compared with £3.6 million in the previous 12 months.
Lightning Fibre’s CEO, Stefan Stanislawski, has said it was “business as usual” following the change of ownership. He also stated the focus is now “more on growing customer take-up, rather than on expanding the network coverage”.
The previous CEO and founder Ben Ferriman left as a director in June last year, according to the firm’s Companies House listing.
Sector analysis
The sale of Lightning Fibre is part of the consolidation of a highly competitive sector of more than 100 companies, according to industry expert Mark Jackson.
The mass development in the UK of ‘alternative networks’ in recent years has led to some firms going into administration.
Mr Jackson, a professional technology writer, IT consultant and computer engineer, told the Eastbourne Reporter that if customer take-up was increased, it could give investors more confidence and help Lightning Fibre resume network expansion once the economic climate improves.
Mr Jackson, who founded the ISPreview website in 1999 to analyse telecoms and broadband developments, said: “In any given year, I probably see one or perhaps two retail broadband ISPs or alternative network operators going into administration.
“In terms of the latter, the value is in the physical network assets and customers, which often get scooped up in a sale or saved via consolidation. Crucially, we don’t yet know precisely what caused Lightning Fibre to take the approach it has.”
Mr Jackson said alternative network providers are a viable alternative to traditional telecoms providers and the UK has seen a mass development of them in the past few years
“Most people in this sector would probably agree that the market for alternative networks has become quite saturated, with around 100-plus operators (most of which have only cropped up since around 2019/2020).
“Some are better placed than others to weather the difficult climate, although between the providers we see both localised and national strains beginning to show. Greater consolidation is widely expected to be the outcome and we’re already seeing some of this.
“The situation with Lighting Fibre is somewhat unusual since it seems to have been a pre-planned event to support a change of ownership (albeit not via the usual route), rather than a sudden collapse of fortunes.
“The operator has already expressed the change to customers as being more of a ‘formality’ and, indeed, from the end-user perspective we don’t expect anything to change, except the name and address of the underlying holding company for the business.”
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