{"id":35449,"date":"2025-08-28T04:18:16","date_gmt":"2025-08-28T04:18:16","guid":{"rendered":"https:\/\/financialrush.com\/?p=35449"},"modified":"2025-08-28T04:18:16","modified_gmt":"2025-08-28T04:18:16","slug":"uk-banks-brace-for-losses-on-loans-to-broadband-challengers","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=35449","title":{"rendered":"UK banks brace for losses on loans to broadband challengers"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Simply sign up to the <!-- -->UK banks<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=cb9ee386-74dd-4408-9402-99e0ce6a0852&amp;concept-id=45c34a4b-8c55-4535-b308-fb4bf52f2833\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>NatWest and Lloyds are among the big banks braced for losses on billions of pounds in loans to troubled UK broadband providers, as the weakest players in the nascent fibre sector battle mounting financial pressure.<\/p>\n<p>Dozens of \u201caltnets\u201d \u2014 alternative <a href=\"https:\/\/www.ft.com\/uk-broadband\" data-trackable=\"link\">network providers<\/a> \u2014 have tried to challenge the dominance of BT\u2019s Openreach and Virgin Media O2 but many are struggling to attract enough customers to meet the costs of their network rollout and have been hit by higher interest rates.<\/p>\n<p>Lloyds Banking Group said last month that its commercial banking unit had set aside \u00a325mn to cover loans that were unlikely to be repaid in full. Its chief financial officer, William Chalmers, said these provisions were largely isolated to loans for the fibre sector.<\/p>\n<p>Chalmers said the sector had suffered \u201cbumps in the road\u201d because of \u201chigher construction costs\u201d and \u201clower subscriber numbers than people had originally anticipated\u201d.<\/p>\n<p>NatWest was among the <a href=\"https:\/\/www.ft.com\/uk-banks\" data-trackable=\"link\">banks<\/a> most exposed to altnets, said four people familiar with the matter, two of whom estimated that the bank had lent about \u00a31bn to the struggling sector. <\/p>\n<p>NatWest has taken provisions in relation to its loans to the fibre sector, said a person close to the bank. Its commercial and institutional division reported a \u00a376mn impairment in its second-quarter results, which the person said included expected losses on loans to altnets. <\/p>\n<p>The bank did not have any significant concerns about its credit portfolio, they added. <\/p>\n<p>Creditors are holding talks with several altnets over how they will repay substantial debts they accumulated to fund the construction of fibre optic networks. <\/p>\n<p>Gigaclear, an altnet serving more than 600,000 homes in mainly rural communities, is in negotiations with lenders \u2014 including Lloyds, NatWest and HSBC \u2014 over how to solve a funding shortfall, according to two people familiar with the matter.<\/p>\n<p>In 2023, the year it secured a \u00a31bn debt package, Gigaclear generated just \u00a334mn of revenue. One person involved in the talks said the banks could end up swapping debt for equity or extending Gigaclear\u2019s credit facility. Gigaclear\u2019s shareholders might also inject more cash, the person said.<\/p>\n<p>Gigaclear said its stakeholders remained supportive. \u201cWe continue to work constructively with them to explore a range of options that support the long-term success of Gigaclear and deliver the best outcome for all parties,\u201d it said. <\/p>\n<p>Another altnet, London-based G.Network, is searching for a buyer after accumulating \u00a3386mn of debt, against revenues of \u00a310mn last year. G.Network declined to comment.<\/p>\n<p>The issues in the sector are also set to affect the state-backed National Wealth Fund, which has committed \u00a31.1bn for lending to altnets in recent years. The NWF has also offered indemnities to lenders on some riskier loans to the sector to encourage investment, according to two people familiar with the matter.<\/p>\n<p>The fund said that ensuring good internet connectivity across the UK was \u201ckey to [economic] growth \u2014 an essential part of the NWF\u2019s mission\u201d.<\/p>\n<p>\u201cWe only commit capital where we are needed and, in the case of altnets, where market appetite is restricted, we have worked to crowd in commercial investors to help meet the government\u2019s Gigabit ambitions,\u201d the NWF added.<\/p>\n<p>Dozens of lenders \u2014 including Soci\u00e9t\u00e9 G\u00e9n\u00e9rale and ABN AMRO \u2014 loaned billions to altnets after industry regulator Ofcom <a href=\"https:\/\/www.ft.com\/content\/5c1dce39-ff99-4eed-ad6d-042e6683dded\" data-trackable=\"link\">launched a plan<\/a> to encourage competition in the UK broadband market.<\/p>\n<aside aria-labelledby=\"aside-label\" class=\"n-content-recommended--single-story n-content-recommended--inset\" data-component=\"recommended\">\n<p class=\"n-content-recommended__title o3-type-body-highlight\">Recommended<\/p>\n<div class=\"o-teaser o-teaser--article o-teaser--small o-teaser--stacked o-teaser--has-image js-teaser\" data-id=\"4d25e026-d91d-4b86-9659-72142028df4e\">\n<div class=\"o-teaser__image-container js-teaser-image-container\"><a href=\"https:\/\/www.ft.com\/content\/4d25e026-d91d-4b86-9659-72142028df4e\" data-trackable=\"image-link\" data-trackable-context-story-link=\"image-link\" tabindex=\"-1\" aria-hidden=\"true\"><\/p>\n<div class=\"o-teaser__image-placeholder\" style=\"aspect-ratio:2048\/1152\"><\/div>\n<p><\/a><\/div>\n<\/div>\n<\/aside>\n<p>As a result the UK now has about 75 broadband providers, according to comparison site ThinkBroadband. The intense competition has driven down prices and returns in an industry with high upfront costs.<\/p>\n<p>Karen Egan, head of telecoms at Enders Analysis, said writedowns in this sector had been \u201cinevitable for some time\u201d. Enders calculates altnets are collectively carrying more than \u00a37bn of net debt.<\/p>\n<p>\u201cThe interest bill [for these companies]\u2009.\u2009.\u2009. is even higher than their revenue bases in many instances,\u201d Egan added. <\/p>\n<p>Lloyds, NatWest, ING, ABN Amro and HSBC declined to comment.<\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/cb9ee386-74dd-4408-9402-99e0ce6a0852\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the UK banks myFT Digest &#8212; delivered directly to&hellip;\n","protected":false},"author":7,"featured_media":35450,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-35449","post","type-post","status-publish","format-standard","has-post-thumbnail","category-tech","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/35449","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35449"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/35449\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/35450"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}