Altnet Zzoomm Speeds Up Search for Merger Partners

The fibre-optic broadband maker is stepping up its search for merger partners amid growing financial troubles for some smaller industry players.

Zzoomm, a company backed by US investment giant Oaktree Capital Management, has hired Acuity Advisors, a specialist technology firm, to identify potential deals, Sky News reported.

Zzoomm operates in nearly 30 towns and small urban communities across the UK.

In June, the company said it was “well positioned to make acquisitions in fragmented and competitive markets because we are growing faster, have a more valued brand and network, and have a stronger commercial proposition than many of our competitors.”

“The enlarged group, building on our established operational, efficiency and technical infrastructure, would benefit from economies of scale,” said Matthew Hare, CEO of Zzoomm.

One industry source said Zzoomm was in talks with several other alternative networks about merging.

Analysts expect a frenzy of consolidation in the so-called altnet sector as companies grapple with higher interest costs on debt and many have taken out significant loans to fund deployments.

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In recent weeks, Sky News has revealed that G Network, whose investors include a pension scheme for UK university lecturers, is working with bankers to attract interested takeover bidders.

CityFibre Holdings – BT’s Openreach division’s biggest rival – and Community Fibre are among those that have expressed an interest in buying G Network.

Sources said Community Fibre had its offer rejected after submitting a bid worth around £300m.

Zzoomm declined to comment on the identities of potential merger targets.